Netflix Reluctantly Pays for Faster Connections

Netflix CEO Reed Hastings accused internet service providers of demanding fees to ensure quick delivery of Netflix content.  He accused the ISPs of slowing users’ internet connection in order to extract funds from Netflix.  They did announce an agreement with Comcast, in which it would indeed pay for high speed connections for their users, and they are working on an agreement with Verizon as well.

Hastings accuses ISPs of abusing their market share to pretty much extort funds from Netflix.  ISPs, on the other hand, claim that Netflix users consume a large amount of bandwidth, and high-speed internet is expensive to deploy.  According to the National Cable and Telecommunications Association, about one percent of broadband customers consume 40% of bandwidth going into homes.  ISPs point out that nearly one third on online traffic during peak hours is Netflix users streaming videos.

It only seems fair that Netflix pays a fee to internet service providers since their customers consume so much bandwidth.  The cost of providing high-speed internet is high, so they should be compensated accordingly.  Also, increased revenue should result in better internet service in the future.  Some other companies, such as Microsoft, Google, and Facebook already have deals with the major ISPs.

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