From a technical level, Netflix has their own servers that are sitting inside third-party colocation facilities in multiple locations. To connect Netflix’s servers to ISPs, Netflix buys transit from multiple providers, which then connect their networks to the ISPs. Netflix pays the transit providers for those connections and with that, gets a certain level of capacity from the transit provider. While Cogent is one of the companies Netflix is buying transit from, they are not the only one. Netflix buys transit from multiple companies, including Cogent, Level 3, Tata, XO, Telia, and NTT, with Cogent and Level 3 being the primary providers. Transit providers like Cogent then connect their networks to ISPs like Comcast in what’s called peering. This is where a lot of the confusion starts as many are under the impression that ISPs like Comcast are suppose to allow any transit provider to push an unlimited amount of traffic into their network without any compensation. This isn’t a Comcast specific policy, but rather one that is standard for all ISPs.
ISPs have something called a peering policy (comcast.com/peering), which are rules that govern how networks connect with one another and exchange traffic. ISPs like Comcast will allow transit providers like Cogent to connect to their network, for free, in what’s called settlement-free peering. However, once the transit provider sends more traffic to the ISP then they are allowed to, per the ISPs peering policy, the transit provider pays the ISP for more capacity to get additional traffic into their network. Remember, Netflix is the one paying Cogent and Cogent is selling Netflix on the principle that it can get all of Netflix’s traffic into an ISP like Comcast. As a result, Cogent has to take all the necessary business steps to make sure Cogent has enough capacity to pass Netflix’s traffic on from Cogent’s network to Comcast. But Cogent isn’t doing that.