Netflix, Comcast in War of Words Over Net Neutrality

By Josh Long Comments
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Netflix CEO Reed Hastings last month characterized Comcast Corp., the nation's largest broadband provider, as a defender of "weak Net neutrality."

Hastings made similar observations this week, prompting Comcast to issue a rebuttal.

In a letter to shareholders commenting on its first-quarter results, Netflix executives expressed concerns that Comcast, through its pending $45.2 billion acquisition of Time Warner Cable, would wield excessive power over the Internet.

"Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix," Hastings and Netflix COO David Wells wrote in the letter. "The combined company would possess even more anticompetitive leverage to charge arbitrary interconnection tolls for access to their customers. For this reason, Netflix opposes this merger."

Netflix's opposition to the Time Warner Cable merger, Comcast proclaimed in a blog, "is based on inaccurate claims and arguments."

Comcast pointed out it is the only Internet service provider in the United States that is currently bound by Federal Communications Commission network neutrality rules that a federal appeals court in Washington set aside. In January, the U.S. Court of Appeals for the District of Columbia Circuit vacated FCC's anti-discrimination and anti-blocking regulations following a legal challenge by Verizon Communications Inc.

Comcast, however, previously agreed to be bound by the network-neutrality regulations as part of its 2011 merger with NBCUniversal, and the company said the regulations would be extended to millions of other Americans – Time Warner Cable's base of broadband customers – under its planned merger.

But Netflix has painted Comcast as anything but a friend of network neutrality.

Last month, Netflix said a lack of adequate interconnectivity has constrained its performance, leaving high-speed Internet customers with "high buffering rates, long wait times and poor video quality."

"Once Netflix agrees to pay the ISP interconnection fees, however, sufficient capacity is made available and high quality service for consumers is restored," Hastings wrote in a March 20 blog. "If this kind of leverage is effective against Netflix, which is pretty large, imagine the plight of smaller services today and in the future."

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