22-04-2014, 15:43 #1
[EN] Comcast: Netflix is Worried About its Business Model, Not Net NeutralityIn its investor letter accompanying quarterly results, Netflix warned that if Comast succeeds in buying Time Warner CableTWC +2.51%, the combined company would be big enough push around any internet company trying to deliver services to U.S. internet users. The warning:
If the Comcast and Time Warner Cable merger is approved, the combined company’s footprint will pass over 60 percent of U.S. broadband households, after the proposed divestiture, with most of those homes having Comcast as the only option for truly high-speed broadband (>10Mbps). As DSL fades in favor of cable Internet, Comcast could control high-speed broadband to the majority of American homes. Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix. The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers. For this reason, Netflix opposes the merger.
In a response also published on Monday, Comcast said the opposition from Netflix “is not about protecting the consumer or about net neutrality. Rather, it’s about improving Netflix’s business model by shifting costs that it has always borne to all users of the Internet and not just to Netflix customers.”
The full response from Comcast is below.
Statement from Jennifer Khoury, Senior Vice President, Corporate & Digital Communications, Comcast Corporation
- “Netflix’s opposition to our Time Warner Cable transaction is based on inaccurate claims and arguments. There has been no company that has had a stronger commitment to openness of the Internet than Comcast and we are the only ISP in the country that is currently legally bound by the FCC’s vacated net neutrality rules. In fact, one of the many benefits of our proposed transaction with Time Warner Cable will be the extension of Net Neutrality protections to millions of additional Americans. Here are the facts:
- Internet interconnection has nothing to do with net neutrality; it’s all about Netflix wanting to unfairly shift its costs from its customers to all Internet customers, regardless of whether they subscribe to Netflix or not.
- There is nothing unprecedented about our agreement with Netflix. It’s very similar to agreements that companies like Akamai, Yahoo, Limelight, and Google have with companies like Verizon, AT&T, Level 3, Sprint, and Comcast. Comcast alone has thousands of these transit relationships.
- In fact, Netflix approached us for this direct connection between Netflix and Comcast, cutting out the wholesalers with whom Netflix had traditionally contracted and paid for transit. This arrangement was thus about Netflix exercising its market power to extract a more favorable arrangement directly from Comcast than what Netflix had been paying for through third party providers.
- If Netflix did not like the terms of our agreement, or if they do not like the terms Comcast provides at any time in the future, Netflix can work with any of the multiplicity of partners that connect with Comcast. There was and is no need for Netflix or any other Internet content provider to work directly with us or any other specific ISP.
- Transit is a highly competitive marketplace and Netflix and other Internet content providers have many choices. In the last 15 years, this transit market has been so competitive that pricing has declined by over 99%.
- Netflix’s opposition to our transaction with Time Warner Cable is also unfounded because the issues raised by Netflix apply to the industry as a whole, which is why the FCC has said that it will look at interconnection issues. Netflix’s arguments are not transaction specific.
- In any event, according to the latest FCC data, 97 percent of U.S. homes have access to three or more fixed or mobile providers who offer broadband services consistent with the FCC definition of broadband, a speed that Netflix has said is sufficient to deliver Netflix streaming video services to the consumer.
- Netflix is free to express its opinions. But they should be factually based. And Netflix should be transparent that its opinion is not about protecting the consumer or about net neutrality. Rather, it’s about improving Netflix’s business model by shifting costs that it has always borne to all users of the Internet and not just to Netflix customers.”
22-04-2014, 15:45 #2
Netflix Isn’t HelpingApril 22nd, 2014 by Rob Powell
It’s official, Netflix opposes the Comcast/TWC merger. I’m not sure why that question had to be asked, I’m sure any number of people could have ghost-written the answer they gave in advance.
That we have Netflix as the de facto standard bearer in a public discussion about peering is something that should give other network operators pause. Netflix’s priorities are their own, and their arguments aren’t necessarily aiming for the common good of transit networks and CDNs.
Netflix is playing the squeaky wheel here. They are trying to improve their bargaining position in further interconnection deals with last mile operators by simply stirring a pot Comcast doesn’t want stirred. It’s a time-honored tradition of course in M&A regulatory battles. But it’s pre-empting the healthier discussions we might be having and drowning out other voices.
The problem here is not that Netflix has to pay Comcast. Netflix has to pay someone unless it has the network assets and other leverage to balance the scales, like Google largely has done. Paying Comcast for peering isn’t by itself an issue. What they’re paying Comcast may not even be an issue, it may be entirely fair (if opaque) and the right thing for both sides.
The problem the industry faces is that we have no means of properly monitoring potential abuse. Everyone may play fair today, but tomorrow is always another day. The world of peering and interconnection has never been a place where the word ‘fair’ applied, but perhaps that is the one thing here we can and should find a way to change.
While Level 3 and some others have been promoting bit-mile peering as a new paradigm, Comcast and AT&T and Verizon and the rest seem to like it exactly as it is. They like it because it has no rules, only guidelines, sharp elbows, and pain thresholds. It isn’t being abused now any more than it ever has, but I fear for the system when the spotlight goes away. And it will go away, and sooner than later.
We need to have a discussion about peering ratios and what they really should mean in a world where nearly all traffic is or soon will be video. Sooner or later there will be no mathematically possible way for any non-consumer-last-mile network operator to balance the traffic they exchange, except of course by having zero traffic. When that threshold is crossed, are all other network operators to be declared evil parasites getting a free ride?
We need to have a discussion about how such video traffic can be one party’s ‘fault’ in a two-party transaction and not the others’. The whole narrative where growing traffic that ought to be celebrated is ‘blamed’ on folks is just unhealthy for the entire sector. Traffic growth should be a good thing.
We need to have a discussion about just how hard it is to build last mile networks cost effectively when the profits seem so much easier to attain. Or is that because they are cherry picked as Verizon has done with FIOS etc? If content providers must contribute to network investment, does that mean last mile operators will commit to hooking up everyone with gigabit connections? I didn’t think so. How far does the needle need to be skewed toward the last mile to make network investment worthwhile *everywhere* on the global network infrastructure, and how do we keep it from going too far?
Whether Comcast buys TWC or not is just barely peripheral to this. Comcast would obviously be bigger, and hence have more clout. But stopping the merger doesn’t materially change the issues at hand in the interconnection world, they are already here.
22-04-2014, 15:48 #3
Netflix’s Arguments Against The Proposed Comcast & TWC Merger Aren’t Valid
Dan Rayburn | Monday April 21, 2014
On Monday Netflix announced earnings and in their shareholder letter, said they oppose the proposed merger between Comcast and Time Warner Cable. While Netflix is entitled to that option, they should be arguing their point with facts, instead of making statements that aren’t accurate. Netflix says that “Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix“, but that’s not true. The definition of unprecedented is “never done or known before, novel, groundbreaking or revolutionary. There is nothing “unprecedented” about interconnection agreements. [If you want to know how the interconnection deal between Comcast and Netflix deal works, from a technical level, read my other post: Here’s How The Comcast & Netflix Deal Is Structured, With Data & Numbers]
As Comcast rightly points out in their rebuttal to Netflix’s statement, Akamai, Yahoo, Limelight, and Google have similar agreements with companies like Verizon, AT&T, Level 3, Sprint, and Comcast. Interconnection deals have been taking place between ISPs and content portals since the late 90′s. For Netflix to imply anything else is simply wrong, and it can’t be argued with. If Netflix wants to argue that there would be fewer options for high-speed broadband, fine, but that’s not what they are doing. They are intertwining the topic of customer choice for ISP providers with interconnection deals, when one has nothing to do with the other. This is about Netflix protecting their business and wanting to keep their costs down. In fact, in Netflix’s letter they even point this out saying the “long term threat” is from ISP driving up “costs for everyone else“. This is simply about what’s best for Netflix’s business, nothing else.
Netflix goes on to say that the “combined company would possess even more anticompetitive leverage to charge arbitrary interconnection tolls“. When Netflix signed a multi-year interconnection deal with Comcast, it wasn’t based on random choice or personal whim, which is the definition of arbitrary, it was based on metrics. All Netflix is looking to do is scare people by using words like “unprecedented” and “arbitrary”, even though they are not accurate. Netflix is quick to say paid interconnection deals are bad for large companies and small content owners, yet we don’t hear any of these other companies backing Netflix up in their argument. How come Netflix isn’t arguing their case with any other large companies? In Netflix’s original blog post on this topic, they mention Google and Skype as companies who would benefit from interconnection agreements being regulated, yet neither Google nor Microsoft, which owns Skype, have publicly backed Netflix with any kind of statement. If not having interconnect relationships regulated is such a big “threat” to the Internet as Netflix says it is, why are they the only content owner complaining?
Netflix also calls out AT&T in their shareholder letter, saying that Netflix streaming on U-verse is poor quality and that “it is free and easy for AT&T to interconnect directly with Netflix and quickly improve their customers’ experience, should AT&T so desire.” It’s also easy for Netflix to connect to AT&T, in a paid model, just like the deal Akamai did with AT&T. When Akamai wanted to get their servers inside AT&T’s network, they did a paid deal with them. Akamai didn’t use the media and public opinion to try to get free access to AT&T, they paid as is customary when you are in the CDN business, which Netflix is, and you want to get deeper into an ISPs network. You don’t see Akamai, the largest commercial CDN on the planet, who handles 20% of the world’s total Web traffic, out in the media complaining about costs associated with running their business.
If Netflix does not like the business model of being a content delivery network and the costs associated with it, then they should not be in the business of operating their own CDN. While they like to make it sound like they don’t have any choices and that Comcast has them in a corner, we know that’s not accurate. Remember, Netflix use to deliver 100% of their video via companies like Akamai and Limelight Networks, who already have the necessary interconnection deals in place. There are other options in the market, and when Akamai and other commercial CDNs were delivering Netflix’s content, you didn’t see many complaints about poor quality Netflix streaming. Netflix has multiple options in the market for delivering high-quality streaming with a good user experience.
On multiple occasions, and in Netflix’s latest letter the say that there is a threat from the largest ISPs “driving up profits for themselves“. While ISPs like Comcast have a lot of profitable revenue, it’s not from interconnection deals. For my last post on this topic, Comcast went on record to point out that less than .1% of their revenue comes from such deals. In 2013, Comcast had revenue of $64.6B and of that, all of their interconnection deals accounted for between $30M-$60M in total. If you want to argue that ISPs raise rates for their services too often, I won’t argue with you, but that’s not the debate. The fact is that the revenue that Comcast and other ISPs get from interconnections deals is not what’s driving their business or contributing much to their bottom line. Netflix makes it sound like there is a lot of money at stake for the ISPs when it comes to interconnection deals, but let’s not debate it because, in the case of
Comcast, we know what the real numbers are.
Netflix didn’t have to move away from third-party CDN providers, but they chose to based on business decisions including cost and control. When their strategy changed and they decided to build out their own CDN, Netflix then had costs associated with that business decision, which they are unhappy with. But that’s what this is about, a business decision made by Netflix for what’s best for their business. This argument between Netflix and Comcast about interconnection deals has nothing to do with net neutrality. This isn’t about “fighting for the Internet the world needs,” like Netflix has said, it’s about keeping their costs down. That’s all it comes down to and it really is that simple. Anything else added to the conversation is simply a distraction to the topic at hand.
25-04-2014, 09:47 #4
Netflix’s VP of Global Public Policy: letter to Sen. Al Franken.April 23, 2014
The Honorable Al Franken
United States Senate
309 Hart Senate Office Building
Washington, D.C. 20510-2309
Dear Senator Franken:
Thank you for your letter. Netflix shares your concerns about the power of a merged Comcast/Time Warner Cable and is committed to sharing facts with policymakers to increase their understanding of this issue. Netflix has seen firsthand how Comcast can leverage its existing market power to extract arbitrary tolls to reach consumers, particularly from Internet video companies like Netflix that pose a competitive threat to Comcast’s own video services.
Below are Netflix’s answers to the questions posed in your letter. We are also taking this opportunity to correct statements regarding our agreement with Comcast and the way the transit market currently functions made by Comcast Senior Vice President David Cohen during the Senate Judiciary Committee’s recent hearing.
1) Will Comcast’s acquisition of Time Warner Cable increase Comcast’s ability to extract payments from non-*affiliated entities as a condition of access to Comcast’s broadband Internet consumers. If so, please explain how and why, noting also any consequences for consumers.
Comcast is limiting the capacity of connections between its network and other networks, unless the network agrees to pay Comcast for access. This congestion causes delays when traffic enters Comcast’s network through the settlement-*free connections. Consumers experience these delays as slow page loads, poor streaming quality, and frequent streaming pauses.
Few Americans have a meaningful choice in broadband service providers: Comcast subscribers are largely stuck with Comcast. And the only way for content providers to reach the millions of broadband subscribers currently controlled by Comcast is to go through Comcast. By degrading consumers’ experience, Comcast can demand that content providers pay them a toll to avoid
congestion and reach their captive subscribers. If content providers cannot effectively reach Comcast subscribers, they cannot compete. So they have little alternative for an uncongested connection unless they agree to Comcast’s terms.
If the Comcast and Time Warner Cable merger is approved, the combined company will represent 40 percent of wired broadband subscribers,1 including those in 19 of the top metropolitan areas, with many of those homes having Comcast as the only option for truly high-*speed broadband (>10Mbps). As DSL fades in favor of cable Internet, Comcast could control high-*speed broadband to the majority of American homes. Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix. The combined company would possess even more anti-*competitive leverage to charge arbitrary interconnection tolls for access to their customers.
2) Do you agree with Comcast’s testimony describing interconnection arrangements generally and Comcast’s new interconnection arrangement with Netflix in particular? If not, please explain.
During the Senate Judiciary hearing on the proposed merger, Mr. Cohen said that it was “Netflix's desire to pay us directly and cut out a middleman.” That is not an accurate description. Netflix agreed to paid peering with Comcast to reverse an unacceptable decline in our members’ video experience. Netflix developed an entire CDN architecture, called “Open Connect” based on settlement-free peering. This no-fee interconnection norm avoids the gamesmanship and blackouts that plague cable carriage and retransmission-consent negotiations in the traditional video space. Indeed, Netflix is directly interconnected with ISPs all over the U.S. and internationally without any exchange of payment from either side. Our agreement with Comcast is the first time that Netflix was forced to pay an ISP for what amounts to access to their subscribers.
In a subsequent statement, Comcast said “[if] Netflix did not like the terms of our agreement, or if they do not like the terms Comcast provides at any time in the future, Netflix can work with any of the multiplicity of partners that connect with Comcast…. Transit is a highly competitive marketplace and Netflix and other Internet content providers have many choices.”
The fatal flaw in this assertion is that the number of transit providers or pathways into Comcast's network is irrelevant to this issue. Every transit provider must ultimately negotiate with Comcast for a connection to Comcast’s network and Comcast controls the terms of that access. Simply put, there is still one and only one way to reach Comcast’s subscribers: through Comcast.
Prior to our agreement to interconnect directly with Comcast, Netflix purchased all available transit capacity into Comcast’s networks from multiple transit providers. Every single one of those transit links to Comcast was congested (even though the transit providers requested extra capacity), resulting in poor video quality for our members. Until Netflix agreed to pay Comcast, the more that Comcast subscribers requested Netflix content, the more congested these connections became, and the more that their Netflix video quality suffered. That is where Comcast is able to leverage its market power most effectively. It can restrict transit capacity into its network to force content providers into paying for uncongested interconnection.
It is inaccurate for Comcast to suggest that by paying Comcast directly, Netflix is simply swapping out payment for services that it used to pay transit providers to perform. For a content company such as Netflix, paying an ISP like Comcast for interconnection is not the same as paying for transit service. Transit providers are paid by companies like Netflix because they carry Internet traffic over great distances and provide connections to all of the networks that comprise the global Internet.
Comcast does not connect Netflix to other networks. Comcast does not carry Netflix traffic over long distances. Netflix connects to Comcast in locations all over the US, and has offered to connect in as many locations as Comcast desires. Netflix is itself bearing the costs and performing the transport function for which it used to pay transit providers. It is Netflix that incurs the cost of moving Netflix content long distances, closer to the consumer, not Comcast.
3) Comcast argues that it operates in a highly competitive marketplace in which consumers have ample choices for high speed Internet service and therefore will not tolerate slow streaming speeds or artificially high costs. What do you make of that argument?
Few Americans have a meaningful choice in broadband Internet access service provider. According to the FCC, about 70 percent of U.S. households have at best two options for 6 Mbps or greater broadband Internet access, which is the floor for data-*rich applications like streaming video. As stated above, consumers do not view mobile broadband as a wireline broadband substitute for applications like streaming video because of low data caps and reliability issues. Couple all of this with the high costs of switching from one provider to another, and most consumers feel that they have to take whatever their ISP offers.
To conclude, Netflix is committed to providing our users with great video quality whenever they chose to watch Netflix. Unfortunately, Comcast appears willing to sacrifice the quality of its own subscribers’ broadband experience to extract fees from the content providers that Comcast’s own subscribers are paying Comcast to access. The fact that Netflix paid to protect our consumers is evidence of Comcast’s power. Acquiring Time Warner Cable will only increase this leverage.
The proposed merger will result in online video content providers paying higher prices for access to Comcast customers or delivering poorer service to customers who depend on Comcast for broadband access. Ultimately, competition and consumers will suffer. That is why Netflix opposes the merger.
Vice President | Global Public Policy Netflix, Inc.
Última edição por 5ms; 25-04-2014 às 09:50.
25-04-2014, 09:52 #5
Comcast Response to NetflixBy Jennifer Khoury, Senior Vice President, Corporate and Digital Communications
Netflix’s argument is a House of Cards. But there is no need for us to engage in a point-counterpoint with Netflix to demonstrate the continued distortions and inaccuracies on which it relies. As we and other industry observers have already noted, Netflix’s decision to reroute its Internet traffic was all about improving Netflix’s business model. While it’s understandable for Netflix to try to make all Internet users pay for its costs of doing business (as opposed to just their customers), the company should at least be honest about its cost-shifting strategy.
Comcast has a multiplicity of other agreements just like the one Netflix approached us to negotiate, and so has every other Internet service provider for the last two decades. And those agreements have not harmed consumers or increasedcosts for content providers – if anything, they have decreasedthe costs those providers would have paid to others. As at least one independent commentator has pointed out, it was not Comcast that was creating viewability issues for Netflix customers, it was Netflix’s commercial transit decisions that created these issues. No ISP in the country has been a stronger supporter of the Open Internet than Comcast – and we remain committed both to providing our customers with a free and open Internet and to supporting appropriate FCC rules to ensure that consumers’ access to the Internet is protected in a legally enforceable way.
25-04-2014, 09:54 #6
Latest Thoughts On The FCC’s Statements and The Netflix/Comcast Dispute...
I will add that personally, I’m tired of hearing so many consumer advocacy groups quoted in the media telling everyone that as a consumer, I need to be saved from the harm that will come to the Internet. They don’t even have the details on what’s being proposed be it the business terms, how compliance will be monitored, who exactly will be in charge of it, or how any of these rules will work. And many of them, can’t tell you the different between peering and transit or speed versus capacity. Just because they call themselves a consumer advocacy group, does not mean they know the subject they are being quoted on. Personally, I think the Internet has worked pretty well over the past twenty years that I have been on it, so I’ll save judgement on what good or harm will come from this until I have more details.
On the Netflix and Comcast dispute, honestly, it’s getting really tiring watching two billion dollar companies try to use the media, and consumers, to convince us of their stance on the subject. Netflix is standing behind blog posts and letters filled with vague, high-level terms, which many times are inaccurate. I say stop all the posturing, show the data you have and let all of us decide what makes the most sense. Stop deciding for us what you think is best and let the consumer, or those who track the industry, decide. Netflix and Comcast both have a lot of data on what’s actually taking place on the backend, from a technical and business level, yet they won’t use any of it when they make their arguments.
If Netflix wants to solve this, make points with facts, real data and numbers, not assertions based on opinions. It’s fine if Netflix has a different take than Comcast or anyone else, but then treat it as such and don’t call things “unprecedented” just to exaggerate and get people all worked up. If either company wants us to takes sides with them, show some transparency as to what’s taking place, especially when it comes to the numbers. I don’t care what anyone says, this debate is all about big business, with both Netflix and Comcast wanting to protect their bottom line. It’s about dollars and cents and who can spend less and have better margins. Any other implication by either side is simply not genuine.
While it is about business for both sides, Comcast has the leg up in this regard as their argument is that interconnection deals have been taking place for a really long time, and they are right. This is how the Internet has always worked and anyone who builds their own CDN, like Netflix has done, has costs associated with connecting to any ISP, if it does not fall within the ISPs peering policy. If Netflix wants to argue that this is no longer the Internet of 2000, or that an ISP like Comcast is now too big and has an unfair advantage, then that’s a fine argument. But it won’t go far without facts and the burden of proof is on Netflix to prove this is bad for everyone.
Netflix has been very vocal to say it’s bad for the whole Internet and consumers, but the one point I hardly ever see anyone talk about is why Netflix is all alone in their corner? Why aren’t other large content owners/distributors backing them up? Why isn’t there a big contingent of content companies rallying around Netflix? Where is Google? Apple? Microsoft? Amazon? They all have a stake in this, if Netflix’s argument is to be believed, especially because they all operate their own CDNs. I find it odd that no one really seems to mention that to date, Netflix is standing alone on this topic, being backed up by no other major content owner.
It also does not help Netflix’s cause that they are all over the place in their statements. When the media and others were stating, with no proof, that Comcast was throttling Netflix’s stream, Netflix’s CEO said he didn’t think that was the case, and we’ve seen no proof to show otherwise. Netflix then signs a deal with Comcast saying it was “a mutually beneficial” agreement, but then weeks later says it isn’t and they did the deal because they had no choice. Netflix said it was a mutually beneficial agreement because in reality it is, from a cost and quality standpoint. The only thing more beneficial to them, would be if they didn’t have to spend any money with Comcast, but still got the improvement in quality.
As I have said before, if Netflix thinks the economics of the CDN market need to change, I’m all for that debate and listening to their reasons. But it seems, at least to me, that Netflix isn’t saying they are paying too much, but rather they should not have to pay anything at all. Am I the only one who feels like every time Netflix makes their argument they sound like someone who always wants everything for free? BOTH sides should bear the cost to improve video quality as it benefits both companies. If that’s what Netflix is proposing, then they need to detail what those numbers are and how BOTH sides pay for it. You can’t try to debate something in a public forum, but then hold back all the data that’s needed to solve the problem.
For those not following the latest happenings between Netflix and Comcast, and I don’t blame you if you aren’t, it’s very time-consuming, and frankly, getting tiring. On Thursday, Netflix’s VP of Global Public Policy sent a letter to Sen. Al Franken. In the letter, he once again reaffirmed Netflix’s statement that Comcast should not merge with TWC as it would be bad for consumers and content owners. Comcast then replied with a blog post about the letter, saying Netflix isn’t being honest about its cost-shifting strategy. Netflix’s person responsible for their CDN, Ken Florance, whom keynoted my CDN Summit show last year, published a post on Netflix’s blog, signaling out Comcast as the one troublemaker. The post points out that “Comcast alone sets the terms and conditions for access to Comcast subscribers,” which is true, because it’s Comcast that owns the Network.
In the letter Netflix sent to Sen. Al Franken, Netflix said they are “committed to sharing facts with policymakers to increase their understanding of this issue.” That’s a bit disingenuous to me. Netflix is using the public to their advantage, getting consumers to complain to Comcast, but then aren’t willing to share “facts” in a public forum. If you stand behind your argument, show what you have, give us the data, and state your case with the evidence you have. This is the same request I made in some of my previous blog posts, but I’m not expecting Netflix to do it, which is a shame.
This whole argument between Netflix and Comcast is pretty childish. Two billion dollar companies who can’t come to an agreement for the benefit of consumers and their own customers. I’m amazed that Netflix would rather the government get involved, which is crazy, considering what kind of track record they have in solving problems. And before I get hate mail saying I am talking down on our country, I’m not. I spent six years in the military, I respect my country, but our legislators don’t have a great track record when they start making policies around technologies they don’t understand.
25-04-2014, 10:31 #7
Netflix Reaches Set-Top Box DealFollowing Netflix’s suggestion earlier this week that it planned to build on its successful integrations with European cable operators by launching its first US cable tie-ins, details have emerged of the first three such deployments.
The agreements – set to be announced formally next week – are with Atlantic Broadband, RCN Telecom Services and Grande Communications, and will see the operators offer Netflix’s subscription service via a channel on their subscribers’ TiVo boxes. Netflix will début on Atlantic and RCN on Monday and then will expand on to Grande’s service by end of May.
Collectively, the three services have about 820,000 subscribers across nine states and Washington D.C.
“We think this signals a new generation of cable-TV service of offerings,” said David Isenberg, Atlantic’s chief marketing and strategy officer. “It’s a watershed moment.”
“Our view has long been that the marriage of linear television and streaming over-the-top (OTT) TV is the future of television, and Netflix has clearly emerged as a must-have over-the-top service,” commented TiVo president and CEO Tom Rogers.
By Shalini Ramachandran
Netflix Inc. is about to take a small but significant step to make its streaming-video service easier for viewers to access.
Netflix has reached a deal with Atlantic Broadband, a small Quincy, Mass. cable operator, to integrate its streaming service as an app through TiVo Inc. set top boxes provided by the cable operator, according to people familiar with the matter.
Atlantic Broadband, a wholly owned subsidiary of Cogeco Cable Inc. serves about 230,000 residential and business customers in Western Pennsylvania, Southern Florida, Maryland, Delaware and South Carolina.
The deal, expected to be announced Monday, will be similar to arrangements Netflix already has with operators in Europe, where Netflix continues to control the billing relationships with its subscribers, the people said. The company has been seeking such arrangements with U.S. operators for months.
By being available through the set top box, Netflix says it is easier for consumers to flip between streaming Netflix videos and watching traditional television without having to juggle remote controls. As it is, many consumers have to stream the service through Internet-connected devices such as an Apple TV or Roku.
Netflix has had conversations with just about every operator in the U.S., including giants such as Comcast Corp. and smaller firms such as Suddenlink Communications Inc., Mediacom Communications Corp. and others. It has run into snags where it has insisted that operators who want the app also directly connect to Netflix's specialized servers, which the online-video outlet says improves the quality of its streaming video. Some operators have been reluctant to strike those network interconnection deals without compensation from Netflix. The company recently agreed to pay for such an interconnection deal with Comcast.
Netflix disclosed in its quarterly shareholders' letter Monday that it expects to reach set top box deals with cable operators in the U.S. this quarter. It said that in the U.S., it will focus on first reaching agreements with operators that lease TiVo set-top boxes to customers. (While many cable companies allow customers to buy TiVo boxes at retail that can be used to watch their cable TV services, relatively few in the U.S. lease TiVo equipment as their primary boxes for customers.) The deal to be announced Monday may also include news of other such Netflix tie-ins with other small pay TV operators who lease TiVo boxes, the people said.
Smaller cable operators have been more open to striking such deals than bigger cable companies that have invested more aggressively in video on demand services that compete directly with Netflix's offering. Cable executives at smaller companies say that broadband is increasingly the more important product than video for them, since rising programming costs are making video an increasingly less profitable offering.