Their acknowledgement comes two days after Netflix said it has agreed to pay Comcast to have the largest U.S. broadband Internet provider connect directly to Netflix's servers in transmitting movies and TV shows, an arrangement that would remove data traffic bottlenecks but worries consumer advocacy groups that prices may rise.
Like many content providers in heavy demand, Netflix uses third-party content distributors to help distribute its movies to Internet service providers, which in turn stream them to their customers.
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Netflix also operates its own set of servers in data centers. And in their deal, Comcast is now bypassing these third-party distributors to connect directly to Netflix's network. AT&T and Verizon are pursuing similar arrangements.
Earlier agreement: : Comcast, Netflix seek faster downloading speed
"We're in discussions with Netflix to establish a more direct connection between our networks, similar to agreements we have with others, so that AT&T broadband customers who use Netflix can enjoy an even better video experience," AT&T said in a statement.
Verizon Communications CEO Lowell McAdam told CNBC on Monday that his company has been talking with Netflix for about a year and expects a deal. "I'm not here to pre-announce a deal," he said. "But it's in both parties' interest."
"Verizon is always looking for new ways to benefit our customers," Verizon said in a statement following the interview.
Netflix is the clear bandwidth hog and occupies about 32% of the downstream traffic in North America, according to network technology company Sa! ndvine.
Its customers' complaints about slowing download speeds have grown more loudly in recent months, and the parties have sought to deflect blame. Netflix has highlighted the problem by releasing its transmission speed index of leading Internet service providers (ISP).
In January, Verizon's DSL service ranked last out of 17 ISPs measured in Netflix movie download speed. AT&T's DSL service ranked 15th on the list. Verizon FiOS, which is available only to about 18 million homes in the U.S., ranked seventh.
To relieve traffic, Netflix has been working with ISPs -- in a program called Open Connect -- to install its own servers within the ISPs' networks. In Open Connect, ISPs can also opt to connect directly to Netflix's servers rather than receiving content from third-party data distributors that have contracted with Netflix.
Most large ISPs, including Comcast, Verizon and AT&T, have refused to participate in the Open Connect program. While it's a free arrangement, Cablevision and Cox are among the few U.S. ISPs that have agreed to experiment with Open Connect.
Netflix is not calling its agreement with Comcast an Open Connect deal. But similar technology methods will be used, as Comcast seeks to connect directly to Netflix's own servers.
Cable industry proponents say the Netflix-Comcast deal isn't dissimilar to other arrangements that have prominent content providers paying to speed up transmission between their networks. The "pipes" between the ISP and third-party distributors -- which are sending and receiving content belonging to multiple clients -- are often clogged, and the party that is jamming the road should pay to relieve traffic, they say.
But consumer advocacy groups say the deal could usher in a new era in which content providers have to "pay to play" and only those who can afford it will take priority.
"Comcast and friends like to cry foul at the sheer amount of traffic video-streaming companies use. But the actual investment these ext! remely pr! ofitable ISPs would need to make to ensure their customers get the quality of service they paid for is extremely small," wrote Craig Aaron of CEO of Free Press on its website. "We're talking so small it wouldn't make the slightest dent in the continued growth in broadband profits these companies enjoy year after year."
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