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After Comcast, Netflix inks second net traffic deal with Verizon

Will pay for faster speeds, despite decrying 'internet tolls'

The smart choice: opportunity from uncertainty

Netflix may not like the idea of paying extra to keep its streaming video content running smoothly but seems resigned to it, having now signed its second network peering deal with a major US broadband provider since the beginning of the year.

"We have reached an interconnect arrangement with Verizon that we hope will improve performance for our joint customers over the coming months," Netflix spokesman Joris Evers tweeted on Monday.

Earlier this year, Netflix's network traffic pools revealed poor performance on Verizon's FIOS and DSL networks, although Verizon has insisted all along that it treats all traffic equally.

The deal follows a similar arrangement that the streaming-media service struck with another giant broadband provider, Comcast, in February. Details of neither deal have been disclosed, although Netflix did confirm that money will change hands with Verizon.

The new partnership must come as a bitter pill for Netflix, whose executives have spoken out against such pay-to-play networking arrangements in the past.

"[Comcast] is charging Netflix for access to its subscribers," the company's VP of content delivery, Ken Florance, wrote in a blog post earlier this month. "Comcast also charges its subscribers for access to Internet content providers like Netflix. In this way, Comcast is double dipping by getting both its subscribers and Internet content providers to pay for access to each other."

It's for this reason, he wrote, that Netflix has also publicly opposed the proposed merger between Comcast and fellow broadband giant Time Warner Cable.

"There cannot be an 'intensely competitive' market when Comcast alone sets the terms and conditions for access to Comcast subscribers. Comcast can simply refuse to provide capacity to any network at any time, constraining the ability for Comcast users to use the services they want," Florance said.

That said, as long as regulators don't step in to alter the US broadband marketplace dramatically, "interconnect arrangements" like the ones Netflix has signed with Comcast and now Verizon would appear to be a necessary evil.

It's not known whether Netflix is actively pursuing such arrangements with additional ISPs, but the firm has made clear that Comcast and Verizon aren't the only sore spots in the US networking landscape.

In a letter to shareholders [PDF] released with its first-quarter earnings report last week, Netflix said that Comcast was "providing a much improved Netflix experience" post-deal, but it blasted AT&T's fiber-based U-verse service for offering slower performance than many DSL ISPs.

"It is free and easy for AT&T to interconnect directly with Netflix and quickly improve their customers' experience," the letter observed, "should AT&T so desire." ®

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