Consumer groups and media watchdogs on Monday expressed “grave concerns” about Netflix’s landmark pact with cable giant Comcast for improved internet service.

Netflix, the world’s largest video on demand service, announced at the weekend that it had made an undisclosed payment to Comcast for direct access to the cable company’s broadband network, in order to ensure smooth delivery of its content.

The deal came just 10 days after Comcast, the biggest US cable firm, announced a takeover of Time Warner Cable, the second biggest, in a $45bn deal that would hand it the accounts of 30 million cable customers. Netflix had previously accused Comcast of slowing its service in order to favour its own video-on-demand service.

The companies said Netflix would receive “no preferential network treatment” but would benefit from “a more direct connection”. Terms were not disclosed.

Craig Aaron, president of internet rights lobby group Free Press, said he had “grave concerns” about the deal.

“As a customer you are in the dark here,” he said. “Was Comcast degrading Netflix’s service to people as a negotiating tactic? To people, I’d add, who were paying month after month for Netflix’s service.”

Aaron said it looked like Netflix had decided it “better get in now” before Comcast becomes even more powerful, while Comcast appeared to have decided to make a deal that would “silence a major critic” as the regulatory authorities review its mega-merger.

John Bergmayer, senior staff attorney at the consumer rights group Public Knowledge, said: “From what information is public, it appears that the largest ISPs [internet service providers] are demanding payment from networks that deliver content and services that residential broadband consumers demand.”

He said the fact that terms of the deal are secret “raises the question of whether they have something to hide”.

“One way to prevent competitive problems from arising, and to reduce the need for future regulation, is to prevent ISPs from holding other networks hostage. This raises concerns in light of the proposed Comcast-Time Warner Cable merger,” he said.

Public Knowledge has objected to the merger. Bergmayer said that in the light of the Netflix deal the Federal Communications Commission, the Justice Department and Congress should move to “ensure that the broadband market continues to meet the needs of its users, and allows companies like Netflix (and the next Netflix) to offer the services that users have demonstrated they want.”

Comcast is currently legally obliged to treat internet traffic equally – meaning a video stream from Netflix should be as fast as one from its own video service, Xfinity. Recent studies, however, have shown that Comcast users were receiving their Netflix media at significantly slower speeds than those using other internet service providers.

Comcast was obliged to make sure all traffic was treated equally – a concept known as “net neutrality” – after its 2011 merger with NBC Universal. But the agreement expires in 2017 and many consumer groups have expressed concerns that the cable giant’s ultimate goal is a tiered internet service that would make it expensive for new startups to compete and raise prices for consumers.

Netflix is by far the largest generator of internet traffic in the US – accounting for a third of broadband traffic.

“There is no question that there are reals costs to that,” said Bergmayer. “There are servers, wires, labour associated with managing that. What concerns us is not money changing hands but what that money is for. Is it for improving the network or is it about ISPs saying we are selling you access to our customers, we are hedging against losing our cable customers to your services?”

He said the deal could well have been favourable for Netflix.

“There’s no way of knowing,” he said. “But even if it was, what does that mean for Netflix’s competition? Does the first one to get the deal pull the ladder up behind them?”