Netflix Inc. had entered a peering agreement in AT&T Corp. in May under which video will be streamed directly to the latter’s network instead of going through a backbone provider, according to a new report that has been confirmed by both companies. The middleman in question is Cogent Communications Group, Inc., one of the world’s five largest Tier 1 players in terms of physical presence.

The move comes in response to continuously rising demand for Netflix content, which takes up over a third of peak-time traffic in North America and has begun to overwhelm Cogent’s network. To make things worse, that load inevitably ends up being passed down to residential providers such as AT&T, which means that they also have to bear the brunt  of households’ fast growing appetite for online video.

Addressing its rapidly increasing bandwidth needs required Netflix to come up with an alternative way of making its library accessible to users, and fast. The company decided to go with the most obvious option and set up dedicated links to major ISPs, but initially refused to foot the bill for the necessary infrastructure upgrades, which led to a bitter war of words  between the streaming giant and the US’s top providers. At one point, AT&T head of external and legal affairs Jim Cicconi went as far as calling it “arrogant” for what he described as an unfair attempt to dodge business costs.

Netflix eventually caved into the providers’ demands, entering interconnection agreements with market leader Comcast Corp. in February, then with Verizon Inc. in April and, as we’ve found out this week, with AT&T as well.  Following the pattern, the latest accord saw the video-on-demand stalwart sign the check for the new links, which a spokesperson for the firm told media are set to come online in a matter of days.

The deals contrast Netflix’s vocal support for net neutrality, the concept that all web traffic should be treated equally and Internet providers (ISPs) must not be allowed to slow or accelerate users’ connections to specific websites for commercial reasons. Yet it now appears the streaming giant is entirely willing to enable faster access its service when the speed-up doesn’t occur in the “last-mile” link that carries data from the residential ISP to the end-destination, the epicenter of the debate.

But while the agreements may give the impression that Netflix is exploiting its size to tip the odds against smaller rivals lacking the resources to install dedicated connections of their own, it claims that the opposite is the case.  The company’s position is that the ISPs left it no choice but to commit to direct peering in order to alleviate slow access to its service, however that was not reflected in the most recent Netflix USA ISP Speed Index, which positioned Verizon at the bottom of the list and Comcast fifth. With that said,  it’s worth nothing that the report takes multiple factors into account in determining ranking, including subscriber usage, which can vary among providers.

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