Netflix Inc. will support Charter Communications Inc.’s $55 billion acquisition of Time Warner Cable Inc. in exchange for free access to Charter’s customers, according to filings the companies sent to the Federal Communications Commission Tuesday.
Charter won’t charge any website to deliver its content more efficiently until at least Dec. 31, 2018, the company said in a filing. Netflix filed a separate document that said it’s committed to supporting Charter’s deal for Time Warner Cable announced in May, given this commitment by Charter.
Netflix is a major customer of Charter and Time Warner Cable, and its support could help allay concerns by regulators that the deal might be bad for customers. Charter’s new “peering” policy prevents the broadband provider from charging any Internet company for faster access, which is particularly important for video-streaming services such as Netflix, Time Warner Inc.’s HBO Go, and Google Inc.’s YouTube. Netflix accounts for about 37 percent of all download traffic in peak evening hours, according to research from Sandvine, a Canada-based networking company.
Netflix opposed an earlier failed bid by Comcast Corp. for Time Warner Cable after reluctantly agreeing last year to pay Comcast for access. With settlement-free “peering,” neither Charter nor Netflix would pay each other.
“This new policy and the commitment to apply it across the ‘New Charter’ footprint is a substantial public-interest benefit and will support scaling the Internet to meet consumers’ growing demand for online services and help foster continued innovation across the Internet ecosystem,” Christopher Libertelli, vice president of global public policy at Netflix, wrote in the filing.
Charter shares climbed 2.2 percent to close at $181.00 in New York, putting the stock up 8.6 percent this year. Time Warner Cable shares rose 1.4 percent to $186.00.
Content companies such as Netflix want to get information from their servers to the networks of consumer Internet providers. Netflix has traditionally used a third company to make this connection. But it also has the option of connecting through its own content delivery network, cutting out the middleman and dealing with companies such as Charter and Comcast directly. The controversy surrounding Netflix’s deal with Comcast came because Netflix agreed to pay for this direct connection. Critics say these payments are a kind of extortion on the cable operators’ part.
The FCC approved rules earlier this year in an effort to curb the power of broadband operators to slow or block traffic. The agency claimed power to judge whether Internet service providers offer fair terms for accepting Web traffic from companies like Netflix and data shippers such as Cogent Communications Holdings Inc. and Level 3 Communications Inc.