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Comcast Caught in Crossfire as Netflix Calls for Stronger Net Neutrality Rules

26 Mar, 2014 By: Doug McPherson

LOS GATOS, Calif. – In a blog post last week, Netflix CEO Reed Hastings shared a strongly-worded message with Internet service providers on net neutrality, explaining why cable giants should be doing more to strengthen net neutrality and protect consumers.

"Some big ISPs are extracting a toll because they can," Hastings wrote. "They effectively control access to millions of consumers and are willing to sacrifice the interests of their own customers to press Netflix and others to pay."

Last month, Netflix struck a deal with Comcast to give it a direct connection to Comcast instead of through third-party providers. The deal is meant to improve both streaming quality and speed for Netflix's library of movies and TV programs.

Since a court of appeals struck down a Federal Communications Commission order in January that Internet providers such as Verizon, AT&T and Comcast had to abide by the principles of network neutrality, treating all users equally, Netflix has been feeling the squeeze. Without net neutrality, ISPs are free to charge more or throttle speeds for data-heavy services such as Netflix streaming or Skype video calling. Since the ruling, Comcast and Verizon customers have complained about poorer quality and speed of their Netflix streaming.

"Netflix performance has been constrained, subjecting consumers who pay a lot of money for high-speed Internet to high buffering rates, long wait times and poor video quality," Hastings wrote. "While in the short term Netflix will, in cases, reluctantly pay large ISPs to ensure a high quality member experience, we will continue to fight for the Internet the world needs and deserves."

David L. Cohen, Comcast executive vice president, said in a statement responding to Hastings' blog post, "We are happy that Comcast and Netflix were able to reach an amicable, market-based solution to our interconnection issues and believe that our agreement demonstrates the effectiveness of the market as a mechanism to deal with these matters.”

Hastings continued, "Some major ISPs, like Cablevision, already practice strong net neutrality and for their broadband subscribers, the quality of Netflix and other streaming services is outstanding. Once Netflix agrees to pay the ISP interconnection fees, however, sufficient capacity is made available and high quality service for consumers is restored. If this kind of leverage is effective against Netflix, which is pretty large, imagine the plight of smaller services today and in the future."

Sen. Al Franken (D-MN), a vocal proponent of net neutrality principles, warned the Department of Justice (DOJ) last week in a letter that Comcast's planned acquisition of Time Warner could threaten the open Internet.

“The Internet is an open marketplace where everyone can participate on equal footing, regardless of one’s wealth or influence,” he writes. “Comcast’s proposed acquisition of Time Warner Cable could disrupt this balance of power, resulting in higher costs and fewer choices for consumers.”

He added that neutrality principles prohibit companies like Comcast from “picking and choosing which lawful Internet content will reach homes and offices across the country.”

Franken acknowledged Comcast's obligations in his letter to the DOJ, but pointed out that what will happen after 2018 remains an open question. The lawmaker also is raising questions about Comcast's paid peering arrangements, like the recent deal that allows Netflix to connect directly to Comcast's network. Peering isn't considered a net neutrality issue, but Franken says the practice still raises competitive concerns.

“By acquiring Time Warner Cable, Comcast would extend its reach substantially, covering millions of additional customers,” Franken writes. “This would give Comcast even more leverage to manipulate Internet traffic to serve its own corporate interests.”

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