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Reed Hastings Blasts ISP Deals as Netflix Inks Another With Time Warner Cable

20 Aug, 2014 By: Erik Gruenwedel

Interconnection agreement is the last with major domestic broadband providers

Netflix has signed an interconnection agreement with Time Warner Cable in an effort to afford its subscribers using the cable operator’s ISP connection smoother streaming of movies and TV shows.

Financial terms of the deal, which mirror similar arrangements with Comcast, AT&T and Verizon, were not disclosed.

“Time Warner Cable reached an agreement with Netflix in June, and we began the interconnection between our networks this month,” a representative from the cable operator said in a statement.

Netflix reluctantly agreed to pay TWC a premium for smoother access the last mile into subscriber homes, thereby reducing the prospect of buffering and diminished streaming capabilities.

Indeed, CEO Reed Hastings Aug. 19 wrote an op-ed as part of Wired.com’s “Save the Net” series, in which he condemns peering arrangements he says will "destroy the Internet." He wrote that technological advances driving the evolution of video distribution over the Web will continue only if the companies controlling consumers' access to the Internet don't adopt business practices that stifle “its revolutionary nature.”

Hastings said proposed net neutrality provisions by the Federal Communications Commission are inadequate. The FCC is exploring new net neutrality safeguards after a federal appeals court struck down previous guidelines in January.

The Netflix CEO said the federal government has to look beyond the last mile into subscriber homes and further up the distribution channel where Netflix delivers its streams to ISPs. Failure to do that, Hastings writes, renders pending net neutrality mandates useless.

“It would be better to have no rules than the ones being proposed by the FCC, which simply legalize discrimination on the Internet,” Hastings wrote. “We'll never realize broadband’s potential if large ISPs erect a pay-to-play system that charges both the sender and receiver for the same content. Those practices would stunt innovation and competition and hold back the broader development of the Internet and the economic benefits it brings.”

The major ISPs contend Hastings’ public outbursts simply mask the subscription streaming pioneer’s unwillingness to pay for its proportionally large share of streaming traffic, which accounts for more than 34% of peak primetime wired download traffic, according to Sandvine.

Meanwhile, the FCC said it has received more than 1 million comments from the public regarding pending net neutrality provisions.

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