Netflix increased its share of fixed-line nternet traffic in North America in the first half of 2014, accounting for 34 per cent of data flowing to consumers during peak times, up from 32 per cent in the latter half of 2013.

That's according to a new report from Sandvine Inc., a Canadian networking services company.

Sandvine also found that file-sharing — the main tool of content piracy — had fallen to 8.3 per cent of all daily network traffic, compared to 31 per cent in 2008, as legitimate options flourished.

Sandvine for the first time identified internet users who are likely "cord cutters," or those likely to drop traditional pay TV. They were the top 15 per cent heaviest users of streaming audio and video.

The group accounted for 54 per cent of all Internet traffic, consuming on average 212 gigabytes of data per month. That would be roughly equivalent to watching 100 hours of video per month, Sandvine said.

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Netflix now makes up more than a third of all data traffic over the internet at peak usage times, Sandvine says. (Paul Sakuma/Associated Press)

Meanwhile, the bottom 15 per cent of streamers accounted for less than 1 per cent of all traffic, averaging under 5 GB of data per month and streaming entertainment less than 1 hour a month.

The report comes amid public feuding between Netflix Inc. and internet service providers about who should pay for network improvements needed to maintain quality video streams. Federal regulators are also proposing rules that could permit new fast lanes on the internet for companies that pay for the privilege.

People underestimate how much Netflix is going to change the industry, says Nilay Patel, a former journalist with The Verge and now managing editor of Vox.com.

"If you look at what Netflix has done to television, it’s taken what used to be a 30-minute diversion and turned it into a 60-hour movie for people,” he said in an interview with CBC's The Lang & O'Leary Exchange.

He argues Netflix, which is not wedded to the current broadcast structure of transmission towers and conventional cameras, will be first to provide content for new types of TV sets.

4K, a higher resolution form of TV, is currently being rolled out in test models by manufacturers, but there is no content for it as yet, he points out. 

"Netflix just has the internet, so they’ll be the first to make 4K content and the first to distribute it to consumers. That’s going to drive the whole new wave of set adoption. Every manufacturer is begging Netflix to give them 4K content," Patel said.