A day after Comcast signed a network connection deal with Netflix to boost data speeds, Verizon's chief executive told CNBC that his company has been in talks with the streaming video pioneer for the past year.
The statements from Verizon CEO Lowell McAdams highlights how the Comcast/Netflix deal may become the first of many arrangements in which money is paid to gain physical access to networks and therefore greater speeds.
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McAdams said the agreement was not a surprise, and that something had to be done to address the increasing demands of streaming video from sources like Netflix.
"In order to keep the Internet vibrant, we have to make the investments. And if you see someone come in with a lot of load on the Internet, the video, you have got to get that in an efficient place," McAdams told CNBC in an interview. "Making the connection far out in the network is a good thing, and frankly paying for it, the commercial model, I think will work pretty well.
He also implied that these types of deals showcase the ability for companies to come to agreements that benefit consumers without interference from government regulators.
"That shows that you don't necessarily need a lot of regulation in a dynamic market," he added.
Regulation of such deals has sparked controversy, as so-called "peering" arrangements of the type that Comcast and Netflix have struck fall outside of typical Internet regulation, including net neutrality.
But as these deals become more common and begin to affect the market, the chance of regulators stepping in grows.
"Net neutrality rules fashioned by the FCC were largely thought to deal with retail access by customers — what consumers could and couldn't be restricted from doing online — rather than on the internal peering arrangements within the system," Jonathan Zittrain, a professor of Internet law at Harvard University, told Mashable in an email. "Though the latter is no doubt something of great interest for the FCC to be following, since it can have such an impact on consumers."
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