Netflix agrees to pay AT&T to speed up its video streams

Good news for AT&T (S ATT) subscribers: The days of slow Netflix streams could be numbered. Netflix has entered a commercial interconnection agreement with the carrier, the company confirmed to the Washington Post Tuesday, meaning AT&T is now the third major carrier that is getting money from Netflix for peering.

The deal was first reported by Mashable, which also got an AT&T spokesperson on the record saying that both companies have been working together since May.

Average Netflix streaming speeds of Comcast (green), Verizon (blue) and AT&T (red) customers.
Average Netflix streaming speeds of Comcast (green), Verizon (blue) and AT&T (red) customers.

Peering has become an increasingly contentious issue between ISPs and Netflix, with companies like AT&T and Comcast (S CMCSK) insisting that Netflix pay them to handle all of its inbound traffic. Netflix has been arguing that those ISPs’ customers already pay for that traffic and has asked ISPs to either peer for free or use Netflix’s own OpenConnect caching infrastructure. But in light of dramatically deteriorating streaming speeds, Netflix has agreed to enter commercial agreements with not only AT&T, but also Comcast and Verizon.

However, even the presence of these kinds of deals doesn’t mean that everything is a-ok. Case in point: Netflix streaming speeds on Verizon’s FiOS network have continued to decline even after both companies struck a peering deal in April. Both companies have blamed each other for being the culprit.