Boston, MA, 02/27/2014 (usastockreport) – Netflix, Inc. (NASDAQ:NFLX) and Comcast Corporation (NASDAQ:CMCSA) might have settled their score through a first-of-its kind deal, but it appears to not go down well with the Consumer Union. This week the video streaming provider Netflix made it convenient for its Comcast users to access its services faster through agreeing to pay an undisclosed amount to the cable giant.
Consumers Union Wary Over The Deal
The support group Consumers Union is believed to have sent a request to the Federal Communications Commission to investigate the Netflix, Inc. (NASDAQ:NFLX) – Comcast Corporation (NASDAQ:CMCSA) deal, as they have doubts over whether Comcast has taken all measures to comply with Internet traffic equality rules. In addition, the Union has also asked the Department of Justice to investigate the claims of slower connectivity issues for Netflix customers. For them, the deterioration of streaming speed is a matter of dispute as Netflix’s current arrangement with Comcast will cut-out third parties who were until now carrying its video traffic. However, the two companies had already specified that the arrangement is not unique and is on the lines of the existing deals in the business environment.
Differences Of Opinion
While post the deal with Comcast Corporation (NASDAQ:CMCSA), Netflix is highly likely to end up making similar arrangements with other carriers like AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ), the analysts also appear to be supportive of such deals. The analyst, such as Dan Rayburn profess that such direct peering deals might have negligible or even in some cases, positive impact on the Netflix, Inc. (NASDAQ:NFLX)’s bandwidth costs as this will remove the extra burden of paying to intermediaries like Cogent Communications Group Inc. (NASDAQ:CCOI). Some others do not stand to support the thoughts as they see Cogent’s disappearance from the business as a threat. They feel that in the absence of Cogent, the network owners will become even more powerful than now. Moreover, the financial terms of these deals are not transparent, posing a threat for higher rates and can act like a tax on the internet.