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Netflix Tech Partner, Comcast Argue Over VOD Traffic Costs

29 Nov, 2010 By: Chris Tribbey

Who should foot the cost of trafficking VOD content?

That’s the question behind the latest open-Internet fight, this time between Level 3 Communications, a technology service provider whose clients include Netflix, and broadband and cable company Comcast.

Thomas Stortz, chief legal officer for Level 3, said that on Nov. 19 Comcast leveled a  “take it or leave it” demand for a new, recurring fee for transmitting movies and other content to consumers.

Level 3, which operates a broadband backbone network that independent online content providers use to transmit movies, games and sporting events to Comcast customers, agreed to the terms, under protest.

“By taking this action, Comcast is effectively putting up a toll booth at the borders of its broadband Internet access network, enabling it to unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity delivered content,” Stortz said. “This action by Comcast threatens the open Internet and is a clear abuse of the dominant control that Comcast exerts in broadband access markets as the nation’s largest cable provider.”

However, Joe Waz, SVP of external affairs and public policy counsel for Comcast, fired back at Level 3, accusing the company of “trying to gain an unfair business advantage over its CDN [content delivery network] competitors.”

“What Level 3 wants is to pressure Comcast into accepting more than a twofold increase in the amount of traffic Level 3 delivers onto Comcast's network, for free,” Waz said in a statement. “In other words, Level 3 wants to compete with other CDNs, but pass all the costs of that business onto Comcast and Comcast's customers, instead of Level 3 and its customers.”

And in a letter to the Federal Communications Commission (FCC), Comcast points to Level 3’s new deal with Netflix as the source of the problem. Netflix streaming reportedly accounts for one-fifth of all American broadband traffic.

“Level 3’s problem apparently arises out of the fact that it recently won a bid to become one of Netflix’s primary CDN providers – in competition with the major national CDNs that already send Netflix and other traffic to Comcast’s network,” the FCC letter reads. “In order to undercut its CDN competitors, Level 3 wants to avoid the commercial arrangements other CDN companies use to terminate traffic onto Comcast’s and other providers’ networks, and instead force Comcast to accept its CDN traffic for free, under a ‘peering’ relationship. This is not how peering works, here or anywhere in the world.”

Waz said Level 3 wants to route Internet traffic to Comcast at a 5:1 ratio over what Comcast sends to Level 3.

“We are happy to maintain a balanced, no-cost traffic exchange with Level 3,” Waz said. “However, when one provider exploits this type of relationship by pushing the burden of massive traffic growth onto the other provider and its customers, we believe this is not fair.”

But Stortz argues that Comcast’s demand for traffic-based payment from Level 3 “violates the spirit and letter of the Federal Communications Commission’s proposed Internet policy principles and other regulations and statutes, as well as Comcast’s previous public statements about favoring an open Internet.“

“With this action, Comcast is preventing competing content from ever being delivered to Comcast’s subscribers at all, unless Comcast’s unilaterally determined toll is paid — even though Comcast’s subscribers requested the content.”

Stortz said Level 3 is pushing policy makers and regulators to “take quick action to ensure that a fair, open and innovative Internet does not become a closed network controlled by a few institutions.”

The two companies will meet later this week to discuss the issue, Waz said.

Comcast is no stranger to net neutrality controversy, after the company was accused of blocking peer-to-peer traffic in 2007.


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