updated 10:39 am EDT, Mon March 10, 2014
Agreement claimed to involve Netflix renting server space in Telenor data center
Netflix may be making more agreements with Internet service providers (ISP) to prevent throttling, and is apparently doing so outside of the United States. A deal between Netflix and Telenor of Norway is reported to be similar to one between the streaming service and Comcast, with Netflix said to be placing its servers within the ISP's own data centers.
The original reported deal with Comcast involves Netflix placing its servers closer to Comcast's connections, lowering the distance between the end user for that ISP and its servers. The agreement for an undisclosed sum allows Netflix to avoid any bandwidth throttling and extra issues caused through using a third-party connection, such as Cogent and Level 3, and in theory providing users with a better service. Verizon is apparently looking to have a similar agreement with Netflix, offering increased access in exchange for payment, with CEO Lowell McAdam claiming both he and Netflix CEO Reed Hastings "have talked about it, and we think it's in both of our interests."
The new agreement from DN.no, via Filter Magazine, reveals a similarly-structured deal. Netflix is said to be paying to use servers in the Telenor data center, ones which provide the video content to subscribers on Telenor's connection. Telenor is also under similar net neutrality policies to those that covered Comcast, until the FCC's rules were mostly struck down by the courts. Unlike the FCC's version, those under the Norwegian Post and Telecommunications Authority are still active, according to Engadget, though Telenor denies taking payment from Netflix for the server placement breaches the rules, as it is not giving any specific traffic preferential treatment.
It is unclear if Netflix is brokering agreements with other ISPs, aside from Comcast, Verizon, and Telenor, but the practice does potentially create an issue for other online services. If more ISPs ask for compensation for taking up too much of a connection, or to set up systems to help companies offer the best possible service to their customers, these additional costs could price some companies out of being able to offer a suitable competing service, and will ultimately cost subscribers more money to indirectly maintain the connection quality for part of their online viewing habits.