The US no longer has net neutrality after the telco Comcast managed to force Netflix to pay up or be throttled.
Although both sides in the case are spinning what has happened, Netflix has actually written a cheque to get a service for its subscribers that had already been paid for, which means there is a two tiered internet over the pond.
Netflix said that it is paying to ensure Netflix movies and television shows stream smoothly to Comcast customers. It will mean that the telcos have a precedent for dealing with other high-bandwidth sites. Comcast did not get everything its own way. As part of the deal, Netflix will get direct access to Comcast's broadband network.
What might have forced Netflix to the table was the news that Comcast agreed to buy Time Warner Cable. This would make Comcast as by far the dominant provider of broadband in the US and a much stronger position to tell Netflix what to do.
Netflix Chief Executive Reed Hastings did not want streaming speeds to deteriorate further and become a bigger problem for customers.
In a statement confirming the broad outlines of the deal, the companies on Sunday said the agreement would provide "Comcast's U.S. broadband customers with a high-quality Netflix video experience for years to come".
This means then that Comcast has won its battle to get a two tiered internet where companies have to pay to get the sort of service which their customers have already paid for.
The telcos claim this is paying for the cost of upgrading the Internet's pipes to carry the nation's growing volume of online video. While several big Web companies in recent years have started paying major US broadband providers for direct connections to get faster and smoother access to their networks, Netflix has held out—until now.
Netflix is likely to agree to pay off the other big providers following the deal.