Comcast, Level 3 Sling Mud in Net Neutrality Dispute

A dispute between Level 3 Communications Inc. and cable operator Comcast Corp. threatens to open a big can of Net neutrality worms.

The scrap also could hold up Comcasts pending merger with NBC-Universal since the FCC likely will want to investigate claims of discrimination before approving the controversial, $7.25 billion transaction.

The problems cropped up earlier this month when, Level 3 says, Comcast said it will start charging Level 3 a recurring fee to transmit online video content to customers. Comcasts policy change came after Level 3 secured a contract with Netflix Inc.

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,” said Thomas Stortz, Level 3s chief legal officer, in a Nov. 29 statement. 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.”

Comcast has responded, saying Level 3 misportrayed” the companies commercial negotiations as being about delivering particular types of traffic. Joe Waz, Comcasts senior vice president for external affairs, told Reuters in a statement that Level 3 is trying to save money on network fees so it can undercut rivals in the competitive Content Delivery Network (CDN) market.

“We are happy to maintain a balanced, no-cost traffic exchange with Level 3. 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,” Waz said.

Comcast and Level 3 plan to meet some time this week to talk things out. But Level 3 seems skeptical.

The fundamental issue is whether Comcast, as the largest cable company in the country with absolute control over access to its cable TV and broadband access subscribers, has the right to unilaterally set a ‘price’ for access that effectively discriminates against competitors of Comcast’s cable and Xfinity content,” said John Ryan, Level 3s assistant chief legal officer, said in a Nov. 30 statement.

In the meantime, Level 3s allegations could hurt Comcasts efforts to close the NBC-U merger. It also could spur the FCCs intent to impose some kind of Net neutrality regulation; the agency has pushed back its December meeting because, analysts suspect, Chairman Julius Genachowski plans to introduce network-management rules.

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