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‘Shelf Space’ Issues for Streaming?

9 Dec, 2010 By: Stephanie Prange

The recent dustup between Comcast and Netflix tech partner Level 3 Communications has brought to light a growing issue in the anything, anywhere, anytime brave new world of digital delivery.

Level 3 is protesting a new fee imposed on it by Comcast for transmitting movies and other content (the volume of which has jumped due to its new deal with Netflix).

Comcast claims it’s merely a distribution pipeline with limited resources, much like shelf space on the store floor. To expand that “shelf space” for Level 3’s new Netflix content, Comcast says it needs more compensation to deliver the greater flow of content. Level 3 says Comcast is doing its cable customers a disservice by not giving them what they want regardless of the content source.

Retailers for some time have charged fees to put products on endcaps or give them special placement. Shelf space is limited at a brick-and-mortar store and, in order to offer a broad range of products, the store may not necessarily be able to stock as much of a given product as consumers would like. The Internet, ostensibly, was supposed to be different, with consumers calling the shots on what they wanted to buy without restrictions. The new controversy calls that promised Internet nirvana into question.

In the case of Level 3, Comcast claims it is being asked to greatly increase the content delivery network’s allotted “shelf space” for its new Netflix traffic at no extra charge. Complicating the issue is the fact that Comcast itself wants the prime “shelf space” for its own cable and Xfinity service, which increasingly competes with Netflix streaming.

The key is how much traffic Comcast owes Level 3 at what price. It’s unclear just how much the extra traffic is costing Comcast, which is the heart of the problem.

Perhaps the upcoming FCC vote on this issue, dubbed “net neutrality,” will find some common ground. It may be that the Internet needs some sort of traffic cop to balance the wishes of consumers and streaming companies against the cost to companies that deliver that streaming and other services via the Web.

Unfortunately, the Internet’s “shelf space” may not be as easily defined as that of Walmart or Target. Which companies or persons bear which costs may be very difficult to determine.

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