Is Comcast Extorting Netflix Instant Streaming?

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It sounds like a badly stereotyped case of extortion, but if Level 3 Communications is to be believed, Comcast may be quietly blackmailing Netflix in order to ensure that its customers get their Netflix Instant videos without any… shall we say… problems. Level 3, which announced a multiyear partnership with Netflix to assist on delivery of the company’s video on demand service earlier this month, has claimed that a week after that announcement, Comcast demanded a new recurring fee to “transmit Internet online movies and other content to Comcast’s customers who request such content.” Thomas C. Stortz, Level 3’s Chief Legal Officer, said that the company agreed to the fee under further pressure from Comcast “in order to ensure customers did not experience any disruptions,” before going on to add, “With this action, Comcast demonstrates the risk of a ‘closed’ Internet, where a retail broadband Internet access provider decides whether and how their subscribers interact with content.” (More on Is Netflix Making Cable Obsolete?)

Comcast denies this characterization, calling the matter “a simple commercial dispute” over an already-existing peering arrangement. Comcast’s Joe Waz told the New York Times, “[We are] already carrying huge amounts of video to our high-speed Internet customers every day through commercial arrangements, and it seems to be working for everybody else… Level 3 is trying to change the rules of the game.”

With no clear rules set for this particular game, it’s no surprise that this matter has become part of the ongoing net neutrality debate. The Media Access Project has already issued a statement about the matter:

Comcast’s request of payment in exchange for content transmission is yet another example of why citizens need strong, effective network neutrality rules that include a ban on such ‘paid prioritization’ practices. It is also yet another clear demonstration of why Comcast should not be permitted to acquire NBC Universal, given its clear tendency to exercise control in the video marketplace.

Level 3 agrees, and plans to approach lawmakers to step in on this particular matter later this week. Netflix, so far, has issued no comment.

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