Verizon and Cogent Communications, an Internet service provider that peers with Verizon, are blaming each other for poor Netflix streaming performance at customers' homes.

As Peter Bright explained in an exhaustive primer on how the Internet works, ISPs pass traffic between one another in an arrangement known as peering. A few days ago, Cogent CEO Dave Schaeffer told GigaOm that Verizon is "allowing the peer connections to degrade." Instead of adding more ports to accommodate increased traffic, Verizon is letting the ports fill up, he claimed. This is allegedly causing bad Netflix performance for Verizon's customers.

Verizon says Cogent's claims are incorrect, or at least incomplete. Verizon VP David Young wrote a blog post yesterday saying that Cogent is not living up to its end of the bargain and should have to pay Verizon. While the two companies send and receive traffic to each other for no charge, "Cogent is not compliant with one of the basic and long-standing requirements for most settlement-free peering arrangements: that traffic between the providers be roughly in balance. When the traffic loads are not symmetric, the provider with the heavier load typically pays the other for transit… This isn’t a story about Netflix, or about Verizon 'letting' anybody’s traffic deteriorate. This is a fairly boring story about a bandwidth provider that is unhappy that they are out of balance and will have to make alternative arrangements for capacity enhancements, just like any other interconnecting ISP."

To fix this disparity, Cogent (a "repeat offender" in Young's words) should take advantage of one of several services Verizon has for sale, he wrote. "Verizon offers a number of readily available solutions for interconnecting providers who send significantly more traffic than they receive from Verizon’s networks," Young wrote. "Solutions such as cloud, hosting, Partner Ports and others are designed specifically to provide a cost-effective means of delivering very large volumes of out-of-balance traffic. Other large streaming video providers (and/or network service providers carrying such one-way traffic) are already taking advantage of these solutions and seeing immediate benefits. These solutions are available today to Cogent, Netflix and any other content or network service provider with similar traffic profiles."

We've asked Cogent for a response to Verizon's claims but had not heard back at the time of publication.

UPDATE: In a phone interview, Cogent CEO Schaeffer provided some additional details to Ars. He noted that the amount of traffic swapped between Cogent and Verizon is unequal because of the traffic requested by Verizon customers who try to watch Netflix streaming video. "The very nature of [Verizon's] customer base makes it impossible" to make the amounts of traffic exchanged between Cogent and Verizon equal, he said.

Cogent is Netflix's primary Internet service provider, and thus plays a central role in bringing Netflix's content to end users. However, ISPs like Verizon that sell to homes are the ones that carry that traffic across the proverbial last mile. Thus, the connections between Cogent and ISPs that serve consumers are crucial. "We're not sending anything to Verizon that their customers don't ask for," he said.

Adding a port (each port provides another 10Gbps of bandwidth) costs about $10,000 each for Cogent and Verizon. That's a small amount of money for Verizon, Schaeffer said. He said he believes that Verizon's decision to limit Netflix bandwidth is due to Verizon wanting customers to use its own streaming video services, such as Redbox Instant.

Schaeffer said that other ISPs who offer content competitive to Netflix have also been slow to add ports to handle Netflix traffic. However, Schaeffer said Verizon has been the worst offender.

Should ISPs bear the burden—or should Netflix?

Not mentioned in Young's blog post is that Verizon could improve Netflix performance for its customers by taking advantage of Netflix's "Open Connect" content delivery network. "ISPs can directly connect their networks to Open Connect for free," Netflix says. "ISPs can do this either by free peering with us at common Internet exchanges, or can save even more transit costs by putting our free storage appliances in or near their network."

We asked Verizon today why it doesn't use Netflix's Open Connect and whether Open Connect could negate the Verizon/Cogent dispute's impact on Netflix performance. Verizon did not answer directly, instead pointing us to the portion of its blog that we quoted above about the "solutions" Verizon offers to Cogent, Netflix, and other content or network providers.

Why might Verizon object to taking Netflix equipment into its data centers? While Netflix offers Open Connect equipment for free to ISPs, it does cost money to operate the equipment. There is also the issue that Verizon offers streaming video that competes against Netflix.

The giant amounts of traffic Netflix streams over the Internet must be dealt with, whether by Netflix, ISPs, or both. In North America, "[a]udio and video streaming account for 65% of all downstream traffic from 9pm-12am and half of that is Netflix traffic," a report on Internet data usage by network equipment vendor Sandvine said last November.

While Netflix says Open Connect already has connections with "Frontier, British Telecom, TDC, Clearwire, GVT, Telus, Bell Canada, Virgin, Cablevision, Google Fiber, Telmex, and more," that only accounts for a minority of Internet traffic. Netflix "hasn't come to any agreement with the biggest US companies in the industry—Comcast Corp., Time Warner Cable Inc., AT&T Inc. or Verizon Communications Inc., which between them controlled 62% of the nation's broadband marketplace at the end of 2012, according to SNL Kagan data," the Wall Street Journal wrote yesterday.

As we wrote six months ago, Time Warner was apparently negotiating with Netflix to become part of Open Connect but objected to the technical requirements Netflix imposes upon partners.

While Netflix saves money on transit fees through its Open Connect arrangements, ISPs like Time Warner and Verizon don't seem to think the program offers them any advantages, even if it would help deliver a better video experience to their customers.