Netflix, Inc. (NFLX) Strikes A Comcast-Like Deal With Verizon

Netflix, Inc. (NASDAQ:NFLX) announced Monday that it has reached a deal with Verizon Communications Inc. (NYSE:VZ) to improve the quality and speed of its streaming content to customers. Netflix signed a similar deal with Comcast Corporation (NASDAQ:CMCSA) in February to ensure that its TV shows and movies stream quickly without hurting the user experience. A Verizon spokesperson declined to reveal financial terms of the deal.

Netflix creates about 33% of downstream traffic in the U.S

In a statement emailed to NBC News, Netflix, Inc. (NASDAQ:NFLX) said that it has struck an interconnect arrangement with Verizon Communications Inc. (NYSE:VZ) that is expected to improve performance for their joint customers. The Internet streaming company knows that its service creates heavy Internet traffic, almost 33% of downstream traffic in the U.S. So, the company has been trying to improve connectivity. Netflix has launched an Open Connect program to improve customer streaming quality. But Verizon, Comcast Corporation (NASDAQ:CMCSA) and many other ISPs had declined to take part in the program.
The deal will allow Netflix, Inc. (NASDAQ:NFLX) to set up a more direct connection between Verizon Communications Inc. (NYSE:VZ)’s network and its own servers to speed up the delivery of content. Since the streaming provider entered a deal with Comcast Corporation (NASDAQ:CMCSA), AT&T Inc. (NYSE:T) and Verizon expressed a desire to sign a similar deal with Netflix to improve user experience.

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Coho Capital LogoCoho Capital commentary for the second quarter ended June 30, 2020. Q2 2020 hedge fund letters, conferences and more Dear Partners, Coho Capital returned 46.6% during the first half of the year compared to a loss of 3.1% in the S&P 500. Many of our holdings, such as Netflix, Amazon, and Spotify, were perceived beneficiaries Read More

Netflix continues to demand strong Net Neutrality rules

Such deals have caused an industry uproar. And Netflix, Inc. (NASDAQ:NFLX) CEO Reed Hastings has extended support to strong “Net Neutrality” rules that would end the need of such deals. Net Neutrality rule states that the users should get equal access to websites over the “last mile.” Despite his reluctance, Hastings signed deals with ISPs to keep his Netflix subscribers satisfied. After the Comcast Corporation (NASDAQ:CMCSA) deal, Reed Hastings expressed his anger over the “arbitrary tax” Netflix had to pay the ISP to improve service for customers.

Netflix, Inc. (NASDAQ:NFLX) shares ticked up 0.41% to $315.49 in pre-market trading Tuesday.