Netflix is paying off Comcast for direct traffic access

US cable giant Comcast has announced a deal with Netflix allowing Netflix’s video-streaming service a more direct route through Comcast’s network, which should improve streaming video quality for viewers. The first indications of the new deal between the companies came last week after App.net founder Bryan Berg observed more direct routes for Netflix data through Comcast’s network. The Wall Street Journal reported on Sunday night that the change was the result of a formal, paid agreement between the two companies, but Comcast does not specify how much the deal is worth.

The result comes after a number of troubling moves by Comcast, which had seen Netflix speeds plummet on the network, as reflected in the service’s monthly ISP rankings. Comcast has sworn it isn’t throttling Netflix traffic, but the simple fact is that Netflix traffic has grown increasingly difficult to deliver onto Comcast’s network, while other ISPs see little degradation. As analyst Rich Greenfield put it, “How come Time Warner is showing solid Netflix performance without paid peering?”

One answer is that Netflix’s data-delivery service, Cogent, has faced increasing difficulty in moving all of Netflix’s traffic through the existing Comcast connections, a problem it does not have with smaller providers like Time Warner. At the same time, providers like Cablevision have solved the problem by signing up for Netflix’s Open Connect service, which offers direct access for free. It’s good news for Cablevision customers, who see faster download times, but it also means the Cablevision network has to bear a larger data load. Comcast and Verizon have publicly refused to sign up for Open Connect. After this latest deal, it seems as if the central issue is payment, effectively holding Netflix subscribers on their network hostage unless the service agrees to pay for a better connection.

Update: this story was revised with additional information from Comcast’s statement.