Cable Technology Feature Article
Netflix Inks Interconnection Deal with Telenor for Video Traffic
By Tara Seals, TMCnet Contributor
Hot on the heels of Netflix inking a peering arrangement with Comcast to directly exchange traffic, the online streaming giant has apparently signed a similar deal with Telenor (News - Alert) Norway.
Jorn Bremtun, a senior communications advisor at Telenor, told Filter this was “clearly a commercial agreement,” but that details weren’t being released because Netflix was in discussions with other companies for similar arrangements.
Netflix launched in the Nordics back in 2012, and Telenor's speed rankings since then have come in dead last in Norway, according to Netflix’ ISP speed rankings. The incumbent operator has groused that Netflix generates too much traffic with video streaming, and reportedly has been asking for compensation for carrying such a heavy load on its pipes. It’s unclear what sort of compensation is involved in the new peering agreement.
It’s an argument that Netflix is familiar with from its domestic dealings. Netflix accounts for a majority of peak Web traffic on any given day (and 30 percent of overall Web traffic, according to research from Sandvine), but the pipe providers aren’t themselves able to monetize that traffic.
This has given rise to a series of disputes over settlement-free peering arrangements, as when Comcast (News - Alert) told Level 3 it would no longer exchange Internet traffic without being paid for it. In that case, which started in 2010, Level 3 was a main backbone provider for Netflix, and was sending more traffic to Comcast than Comcast was sending back to Level 3 — an uneven arrangement that demanded compensation, in Comcast's view, to help pay for necessary network upgrades to accommodate the heavy Netflix load.
They two eventually resolved the dispute — terms were not disclosed — but it showcased the fundamental issue with over the top (OTT), i.e., who should ultimately pay for the infrastructure to carry it?
And as far as Net neutrality goes, Verizon (News - Alert) last month prevailed in a lawsuit to block the Federal Communications Commission's ability to enforce Net neutrality rules. Since then, consumers have anecdotally reported slower video streaming experiences across a variety of providers.
Perhaps not coincidentally, last month Netflix agreed to pay Comcast for direct access to the No 1 cable MSO's network — an interconnection agreement that will help ensure that Netflix movies and television shows stream without hiccup to Comcast customers. While it's not quite a toll-road deal that would kill Net neutrality (News - Alert) by allowing ISPs to throttle traffic that they don't like and aren’t paid to deliver, it sets up a precedent for Netflix and others' approach to the broadband providers upon which they rely. Apparently, given the Telenor news, that’s now playing out.
More deals could soon be coming: Speaking on CNBC, Verizon CEO Lowell McAdam (News - Alert) said that the two companies were in talks to ink a paid direct peering agreement as well.
"It shows you don't necessarily need a lot of regulation in a dynamic market here,” he said. “Doing these commercial deals will get good investment and good returns for both parties.”
Edited by Cassandra Tucker