The arrangement presumably calls for Netflix to pay a fee to Verizon in exchange for interconnecting directly with the company's servers, which will ensure that Verizon subscribers are able to stream movies from Netflix relatively smoothly. The deal was first reported by BTIG Research analyst Walter Piecyk, who broke the news late Monday afternoon on Twitter. Netflix later confirmed the deal to several news outlets.
News of Netflix's deal with Verizon comes just several days after Netflix told Sen. Al Franken (D-Minn.) that it opposed Comcast's merger with Time Warner on the ground that it 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.”
At the time, Netflix accused Comcast of double-dipping by charging Netflix to access subscribers, and also charging subscribers to access Netflix's streams.
Netflix's move also comes just one month after it urged the Federal Communications Commission to enact “strong” net neutrality rules, which the company said would limit broadband providers' ability to charge extra to interconnect with the servers. The FCC didn't take Netflix's advice. Instead, FCC Chairman Tom Wheeler proposed regulations that would allow pay-for-play agreements. If those regulations go through, deals between content companies like Netflix and broadband providers could become commonplace.