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Netflix all but accuses Comcast of outright extortion

Netflix teams up with Senator Al Franken to oppose Comcast/Time Warner merger

Financial trends and news by Faith Merino
April 25, 2014 | Comments
Short URL: http://vator.tv/n/3689

Netflix has not gone gently into that good night following its deal with Comcast to get decent performance for its streaming customers. The company has raised hell about it and is now working with Senator Al Franken to oppose Comcast’s $45 billion acquisition of Time Warner Cable.

Netflix’s VP of content delivery Ken Florance explained Netflix’s position in a blog post Thursday evening.

“Comcast already controls access and sets the terms of access to a substantial portion of people who connect to the Internet in the United States. We're very concerned that a combined Comcast-TWC will place toll taking above consumer interests and will use their combined market power to the detriment of a vibrant and efficient Internet. That’s why Netflix opposes the merger,” Florance wrote.

The gloves are off. Netflix is all but flat-out accusing Comcast of extortion at this point. As Florance explained in the blog post, paying Comcast for interconnection is not the same thing as paying for transit—which Comcast has implied is the reason it’s charging Netflix for better service. Transit networks like Level3, Cogent, XO, and Tata typically perform those functions, which companies like Netflix pay for—but now Netflix is performing those functions itself because Comcast has “allowed its links to Internet transit providers…to clog up,” Florance averred.

In other words, Netflix is transporting Netflix content, which means Comcast isn’t charging Netflix for service; it’s charging the company for access to Comcast subscribers. Meanwhile, Comcast is charging its subscribers for access to content from companies like Netflix. Video currently drives some 50% of all Internet traffic.

“In this way, Comcast is double dipping by getting both its subscribers and Internet content providers to pay for access to each other,” wrote Florance.

If the largest Internet service provider in the U.S. can choose to restrict capacity to any network at any time in order to force content companies to pay up, it doesn’t take a giant leap of logic to imagine what will happen when Comcast merges with Time Warner Cable and becomes the super ultimate global dominator of ISPs. For that reason, Netflix is opposing the merger and working with Senator Al Franken to prevent the deal from being approved.

Netflix wrote a letter to Franken earlier this week to outline its position.

“Netflix has seen firsthand how Comcast can leverage its existing market power to extract arbitrary tolls to reach consumers, particularly from Internet video companies like Netflix that pose a competitive threat to Comcast’s own video services,” wrote Netflix’s VP of Global Public Policy Christopher Libertelli.

Libertelli added: “If the Comcast and Time Warner Cable merger is approved, the combined company will represent 40 percent of wired broadband subscribers, including those in 19 of the top metropolitan areas, with many of those homes having Comcast as the only option for truly high-speed broadband.”

Netflix won't be helped by the FCC's proposal to allow ISPs to charge Internet companies for "fast lanes." 

 

Image source: geek.com


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