Critics and investors are up in arms over a deal in which Netflix (NASDAQ:NFLX) is paying for access to Comcast's (NASDAQ:CMCSA) Internet pipes. Is it a win or a loss for Netflix? What about the rest of the industry?
Host Ellen Bowman puts these questions to Fool analysts Nathan Alderman and Tim Beyers in this week's episode of "1-Up on Wall Street," The Motley Fool's Web show in which we talk about the big-money names behind your favorite movies, toys, video games, comics, and more.
Tim says Netflix probably welcomed the deal since it already pays to bring its Open Connect content delivery network, or CDN, to data centers around the globe to save on bandwidth and make it easier for networks such as Cablevision to get access to Netflix content.
Comcast hadn't participated in Open Connect. Now it doesn't matter, Tim says. Netflix gets direct access Comcast's network at various Internet peering points (think of them as on-ramps onto the digital highway system we call the Internet). Traffic should flow faster and more smoothly as a result.
Nathan says Comcast is exacting what amounts to a tribute for delivering streams at high speed over the last mile. And if such deals were to become commonplace? Comcast and its peers could end up establishing pricing tiers for Internet data service, effectively penalizing active users of streaming services. At that point, Nathan says regulators may be forced to step in.
Now it's your turn to weigh in using the comments box below. Where do you stand on the Netflix-Comcast deal? Please watch the video as Ellen puts Nathan and Tim on the spot, and be sure to check back here often for more "1-Up on Wall Street" segments.