Here's Why Consumers, Internet Providers, and Netflix Itself Should Love the Open Connect System

Netflix (NASDAQ: NFLX  ) publishes raw network performance data for major Internet service providers. It's not just an idle information-sharing hobby, though -- these reports are putting pressure on ISPs to get into Netflix's Open Connect content delivery system.

Two qualities tend to separate the top performers from the wannabes in these Netflix reports:

  • High-speed optical fiber services tend to beat cable, DSL, and wireless options. However...

  • ISPs aboard the Open Connect bandwagon often soar high above all others, even if they offer inferior raw bandwidth speeds.

In the American market, Google (NASDAQ: GOOGL  ) and Cablevision (NYSE: CVC  ) have ruled the rankings almost since the beginning. Yes, Cablevision's coaxial cable services consistently trounce Verizon (NYSE: VZ  ) FiOS, which is a fiber-optic service with higher and arguable more reliable delivery speeds.

The top four performers, including Cablevision and Google Fiber, have installed Netflix Open Connect in their data centers. As a general rule, the others haven't.

The same holds true in Europe and other markets. In Sweden, you can easily tell the Open Connect adopters apart from the Luddites, because they cluster together at the top and bottom of the charts, respectively. It doesn't matter which company is larger, or which runs on high-speed fiber networks. The difference maker is Open Connect, and nothing else matters.

In the video below, Fool contributor Anders Bylund gives you the biggest reason why each stakeholder -- consumers, ISPs, and Netflix itself -- should care about Open Connect and speed ratings. Spoiler alert: It's all about the end user's viewing experience.

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