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Netflix Urges FCC to Reject Comcast/Time Warner Merger

3 Sep, 2014 By: Doug McPherson

WASHINGTON – Netflix has asked the Federal Communications Commission (FCC) to stop Comcast’s proposed $45 billion merger with Time Warner Cable in a 256-page filing.

Netflix says the deal would “give applicants the ability to turn a consumer’s Internet experience into something that more closely resembles cable television … and set up an ecosystem that calls into question what we to date have taken for granted: that a customer who pays for connectivity to the Internet will be able to get the content she requests.”

Squabbles between Netflix and Comcast over data caps and paid peering deals are well documented. Paid peering arrangements involved Netflix paying extra fees to broadband providers to connect directly with their servers instead of sending data through an intermediary like Cogent or Level 3.

Regardless, Netflix entered into those types of deals with Comcast, AT&T, Verizon and Time Warner earlier this year, hoping for better video streams. But Netflix hasn’t been happy with the arrangement.

CEO Reed Hastings wrote in Wired: “We’ll never realize broadband’s potential if large ISPs erect a pay-to-play system that charges both the sender and receiver for the same content.”

In its filing with the FCC, Netflix added, “At the same time Comcast engaged in strategies to degrade its own customers’ ability to watch Netflix’s video, Comcast sold customers who wanted access to high-quality Netflix video a more expensive broadband package even as it knew that a higher-speed broadband plan would do nothing to address the quality of Netflix’s video.”

Netflix adds the merger would give Comcast even more leverage over companies that rely on the Web to deliver content. “The combined entity’s control over its interconnection arrangements, coupled with such an increase in size, would allow it to insert itself into the heart of all Internet commerce, disrupting innovation ... and foreclosing compelling services from ever reaching the light of day.”

Netflix also takes issue with Comcast’s data caps, arguing that they “provided Comcast with a means of pushing users to substitute its own affiliated content for [online video] content by exempting their affiliated content and services from the data cap.”

Regulators seem concerned by at least some of the issues that the company is raising. Late last week, the FCC asked Comcast to provide specific information about data caps as well as its peering agreement with Netflix.

But analysts aren’t sure if the issues will lead to killing the deal or if the FCC will impose any conditions on the cable giant.

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