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Comcast Denies It Wants to Block Netflix

1 Dec, 2010 By: Erik Gruenwedel

Comcast has gone on the defensive, issuing a statement outlining “10 facts about peering” as the No. 1 cable operator defends accusations it is trying to stymie Netflix’s budding streaming service by charging a “recurring fee” to a third-party technology service provider.

On the surface, Comcast’s demand for increased fees from Level 3 Communications for the transmission of movies and related digital content (notably Netflix streams) would appear analogous to recent retransmission battles between The Walt Disney Co. and News Corp. against select cable and satellite operators.

Critics contend Comcast, which is in the process of acquiring NBC Universal and rolling out its own distribution channels, is attempting to nip Netflix streaming in the bud by leveling added costs to third-party distributors of digital content.

An online petition (http://act.boldprogressives.org/sign/petition_netflix/?source=bp) to the Federal Communications Commission generated more than 90,000 signatures decrying Comcast’s action, and prompted social media blogger Perez Hilton to weigh in on the conflict.

“This could get ugly,” Hilton wrote in post. “Given the fact that Netflix just went up in price, we're thinking subscribers would NOT be happy if prices went up again so soon! Work this out, you two! Seriously.”

In a Nov. 30 post, Joe Waz, SVP of external affairs and public policy counsel with Comcast, listed 10 reasons why the issue is nothing more than an “old-fashioned commercial peering dispute.”

“Any rumors about blocking Netflix are false,” Waz wrote, adding it is not about online video or net neutrality.

He said peering agreements are decades-old negotiated commercial arrangements between providers such as Comcast and Level 3 that carry traffic across the networks that comprise the Internet.

“This is all about Level 3 gaining an unfair advantage over its competitors by gaining enormous additional capacity at no cost to itself, instead shifting the financial costs to Comcast’s high-speed data customers,” Waz wrote.

Frost & Sullivan analyst Dan Rayburn believes the issue is about power, not money. He said at no time has Comcast said what its added costs would be delivering higher volumes of Netflix (or other) streamed content.

“And if it does [cost more to stream], it’s Comcast’s burden to bear as it’s content that their customers are demanding,” Rayburn wrote in a post. “Comcast is basically asking Level 3 to subsidize their service by charging Level 3 a fee, and this is where things become scary if Comcast is allowed to get away with this.”

The FCC is set to vote Dec. 21 on a net neutrality proposal.

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