Netflix, Verizon reach interconnection pact

Netflix (NASDAQ: NFLX) has signed a new interconnection agreement with Verizon (NYSE: VZ) in an effort to improve the experience it can provide to users that leverage the service provider's fiber to the home (FTTH) network for access to the streaming video service.   

Similar to the interconnection agreement it signed with Comcast in February, Netflix will pay Verizon to ensure it has faster network access. Neither company would reveal the financial terms of the agreement.

"We have reached an interconnect arrangement with Verizon that we hope will improve performance for our joint customers over the coming months," said a Netflix spokesperson.

Despite reaching an agreement with Comcast (NASDAQ: CMCSA), Netflix has called the fee it has to pay to the cable MSO an unfair toll on over the top (OTT) providers that want to use the Internet to deliver video and related content to consumers on televisions or their mobile devices. The streaming video provider has also been an outspoken critic of Comcast's proposed acquisition of Time Warner Cable.

Ken Florance, vice president of content delivery for Netflix, claimed in a blog post that Comcast was forcing Netflix to pay for better access.

In addition to its agreements with Comcast and Verizon, Netflix has been making an effort to improve the streaming experience for its customers with its Open Connect program, which lets ISPs connect to them at Internet exchanges or even install its own servers within the ISPs' networks. Perhaps not surprisingly, Comcast and Verizon don't participate in the program.

Comcast is only one service provider that Netflix has an issue with. In a recent letter to shareholders, Netflix's CEO Reed Hastings said AT&T's (NYSE: T) fiber-based U-verse service "has lower performance than many DSL ISPs such as Frontier, CenturyLink and Windstream."

Interestingly, Netflix's latest agreement with Verizon emerges amidst the FCC's proposal to allow content providers like Netflix to pay service providers access to consumers. A number of open Internet advocates railed against the proposal, saying that it will allow large ISPs to create toll stops.

For more:
- Bloomberg has this article

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