Netflix pays off Verizon in order to enable faster streaming speeds

Detailed by USA Today, Netflix representatives have confirmed that the company struck a pay-for-speed, peering deal with Verizon that's designed to increase streaming video speeds for both Verizon FIOS and Verizon DSL customers. Providing an extremely brief statement, Netflix spokesman Joris Evers said "We have reached an interconnect arrangement with Verizon that we hope will improve performance for our joint customers over the coming months." Verizon representatives also confirmed that the deal exists, but declined to comment on the details of the arrangement.

Interestingly, both Verizon FIOS and Verizon DSL speeds have plummeted in the last year. Looking at the Netflix speed charts, Verizon FIOS customers were getting an average of 2.2 Mbps six months ago, but that dropped to 1.8 Mbps in the last three months. Similarly, Verizon DSL customers were getting 1.4 Mbps several months ago, but that's dropped to less than 1 Mbps in the last three months. At those speeds, customers are likely experiencing longer loading times, quality shifting between standard definition and high definition as well as a general inability to play 'Super HD' 1080p or 3D content on the streaming video service.

Not surprisingly, the average streaming speeds of Netflix on Comcast have absolutely skyrocketed after the two companies struck up a similar peering deal. After hitting an all-time low of 1.5 Mbps during January 2014, the speed index documented a massive 66 percent jump in speed to 2.5 Mbps during March 2014. However, Comcast still lags behind other major companies like Cox and Charter. 

While Netflix CEO Reed Hastings has publicly admonished the interconnectivity issues of Internet service providers, it appears as if Netflix still plans to shell out payments in order to improve the experience for customers. The announcement of this deals comes shortly after the FCC launched a new proposal that would allow these type of deals, provided that companies like Verizon could prove that the partnership was "commercially reasonable" according to the FCC's standards. 
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