The so-called “peering” deal -- which reportedly was signed in June -- is rolling out this month, according to GigaOm. Earlier this year, Netflix announced similar deals with Comcast, AT&T and Verizon. The precise terms have never been revealed, but Netflix's paid peering deals generally call for the company to pay extra fees to ISPs in order to connect directly with their servers, as opposed to sending data through an intermediary like Cogent or Level 3.
Although Netflix has been signing these deals with Internet service providers, the company isn't happy about doing so.
"This year we reluctantly agreed to pay AT&T, Comcast, and Verizon for access to our mutual subscribers, who were seeing a rapid decline in their Netflix viewing experience because of congestion at the connection point where we transfer content to the ISP,” Hastings wrote in Wired on Tuesday, shortly before the Time Warner deal came to light. “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.”
In March, shortly after signing the peering agreement with Comcast in March, Netflix CEO Reed Hastings publicly called on the Federal Communications Commission to enact “strong” net neutrality rules, which he says would prohibit broadband providers from charging interconnection tolls.
Several months later, the FCC launched an investigation into paid peering. "Consumers need to understand what is occurring when the services they pay for do not deliver the content they desire," FCC Chairman Tom Wheeler stated at the time. So far, the agency reportedly has asked seven Internet service providers to explain the details of their interconnection arrangements with content companies.
At the same time, Wheeler has indicated that he doesn't believe that paid peering arrangements contradict net neutrality principles. That's because, according to Wheeler, net neutrality principles apply to traffic as it travels between ISPs' servers and customers' homes -- but not between content providers like Netflix and servers.