After rumors emerged this weekend, Netflix and Comcast on Sunday confirmed a deal that will provide Comcast's U.S. customers with access to Netflix's high-quality video streams. Terms of the multi-year agreement were not disclosed, though the Wall Street
Journal said(Opens in a new window) Netflix will pay for access to Comcast's broadband network. Comcast said that Netflix will not receive preferential network treatment. Comcast and Netflix have been working on the deal for "many months," and the resulting agreement establishes "a more direct connection between Netflix and Comcast,
similar to other networks, that's already delivering an even better user experience to consumers, while also allowing for future growth in Netflix traffic," the companies said in a statement. The announcement did not specifically mention Netflix's Open Connect content delivery network, which Netflix launched in June 2012.
But Open Connect serves as the video provider's very own content delivery system, with Netflix directly connecting its network to participating ISPs or embedding its content delivery servers inside an ISP's network. Cablevision and Google Fiber are among the ISPs that have signed on for Open Connect. At last year's CES, Netflix started offering Open Connect partners the option to stream in Super HD. ISPs that didn't sign on for Open Connect - like Time Warner Cable - didn't take too kindly
to that. "We believe it is wrong for Netflix to withhold any content formats from our subscribers and the subscribers of many other ISPs," TWC said last year. Comcast is currently in the process of acquiring Time Warner Cable, so this deal might soon extend to TWC customers, too. Netflix speeds, meanwhile, made headlines recently
after Netflix's monthly ISP speed index(Opens in a new window) showed a drop among some of the major U.S. ISPs. Verizon FiOS, for example, averaged about 2.11 Mbps in December, but dropped to 1.82 Mbps in January. TWC had a slight drop from 2.02 Mbps to 2.01 Mbps. Comcast was No. 14 on the list for January,
averaging about 1.51 Mbps, down from 1.63 Mbps in December. The debate is all the more interesting given the demise of the FCC's net neutrality rules. Without the threat of punishment from the commission, would ISPs discriminate against bandwidth-intensive services like Netflix in order to improve service overall? For now, the ISPs
and Netflix have denied that anything untoward is going on. And Comcast is required to abide by the net neutrality rules until at least 2018 as part of its NBC Universal acquisition. Meanwhile, the FCC has already moved to re-write the its net neutrality rules so that they will survive yet another court challenge.
Reports of the Comcast-Netflix deal, meanwhile, first cropped up when App.net co-founder Bryan Berg noticed a change(Opens in a new window) in the host serving his Netflix streams.
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Comcast customers are about to get improved streaming service from Netflix after the two companies announced on Sunday an agreement to give Netflix a direct connection to the broadband provider.
As part of the deal, Netflix has agreed to pay Comcast for direct access, the first time the online streaming video company is paying a broadband provider in the U.S. Terms of the deal were not disclosed.
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This agreement means that Netflix will deliver its movies and TV programs to Comcast's broadband network as opposed through third party providers, giving viewers faster streaming speeds for watching movies and TV programs.
The deal could also lead to Netflix
striking similar arrangements, known in the industry as interconnect agreements, with other major broadband providers like Verizon and AT&T.
(Read more: How net neutrality debate could affect consumers)
The companies said in a joint statement that they have been "working collaboratively over many months'' to strike a multi-year agreement. Netflix will not receive preferential network treatment, the companies said.
The announcement comes as federal regulators are wrestling with an issue known as "Net neutrality'' concerning broadband providers and whether they can slow down traffic to some particular websites or applications, potentially forcing content providers to pay for faster Web service.
The Federal Communications Commission said last week it plans to rewrite the rules after a U.S. court struck down the commission's previous version.
With more than 44 million subscribers throughout the world, Netflix has been making an effort to connect directly with broadband Internet providers. It has struck similar deals with Cablevision and Cox, though Netflix did not pay for these connections.
(Read more: 'House of Cards' 101: How to manage the media)
Comcast is preparing to acquire Time Warner Cable for $45 billion, a deal that will draw the scrutiny of U.S. antitrust enforcers.
The combined company would have a near 30 percent share of the U.S. pay television market, as well as be the major provider of broadband Internet access.
—Reuters
(Disclosure: Comcast is the owner of NBCUniversal, the parent company of CNBC and CNBC.com.)