Comcast Today: Netflix CEO Criticizes Comcast’s Hold on the Internet
Turns out Netflix isn’t so thrilled with its deal to ensure Comcast customers got fast and uninterrupted streaming of their videos.
Last month Netflix decided it would pay off huge internet service providers like Comcast to make its service better for customers, but it’s clear that the popular streaming company doesn’t want to be forced to cut similar deals in the future. In a measured and strongly worded article issued today, Netflix CEO Reed Hastings says that “net neutrality must be defended and strengthened,” calling out giants like Comcast and Verizon for bad behavior.
“The essence of net neutrality is that ISPs such as AT&T and Comcast don’t restrict, influence, or otherwise meddle with the choices consumers make,” Hastings writes. “The traditional form of net neutrality which was recently overturned by a Verizon lawsuit is important, but insufficient. This weak net neutrality isn’t enough to protect an open, competitive internet; a stronger form of net neutrality is required.”
Netflix has been battling with Comcast and other ISPs for some time over poor download speeds for its streaming customers. Comcast and Verizon, among others, have long sought to extract payment from Netflix because it generates an inordinate amount of all residential Internet traffic, about 30%. The ISPs drew a line in the sand, refusing to implement capacity upgrades that would allow for acceptable streaming speeds. Their argument is that since Netflix generates so much of the traffic that ISPs must support, they should share some of the ISP’s cost of delivering it. Netflix has countered that, in the absence of any revenue-sharing opportunity, (unlikely) it should not be expected to shoulder the ISP’s costs of doing business. Furthermore, Hastings argues that customers paying for Internet access should get the download speeds they’re paying for, no matter who the content is coming from.
Comcast took issue with Hastings. In a statement, the nation’s largest ISP said Thursday it “supported the FCC’s Open Internet rules because they struck the appropriate balance between consumer protection and reasonable network management rights for ISPs.”
Like other content providers, Netflix uses third-party distributors to store and move its content to ISPs. Once ISPs receive the content at the entrance of their networks, they then transmit it to consumers.
Comcast said the old net neutrality rules “never were designed to deal” with such back-end issues. “Providers like Netflix have always paid for their interconnection to the Internet and have always had ample options to ensure that their customers receive an optimal performance through all ISPs at a fair price,” it said.
Time has good coverage of this complicated story, as does the Washington Post.
Other Comcastic headlines:
Comcast negotiated an easy escape hatch if regulators put too much heat on the $45.2 billion merger with Time Warner Cable, according to a regulatory filing Thursday. According to the S4 filed with the Securities and Exchange Commission on Thursday, Comcast will not owe Time Warner Cable a breakup fee if the deal falls through due to regulatory issues. The filing also indicated that Time Warner Cable CEO Rob Marcus, who had only been on the job as CEO for two months before the merger was announced, will receive an $80 million severance package should the deal be completed and he step down as CEO. Marcus had been Time Warner Cable’s chief operating officer and was instrumental in putting together the deal with Comcast, the filing also indicates. (CNET News)
Governor Cuomo today addressed a report that state leaders are discussing giving New York’s Public Service Commission (PSC) much greater oversight of the telecommunications industry. Sources told the Post that a decision to bolster the PSC’s power would make the Comcast-Time Warner Cable merger almost impossible to finalize. Asked in Albany whether he stood against the combination of the two largest cable companies in the U.S., Cuomo said, “I haven’t taken any position on the deal itself. I haven’t reviewed it and I don’t have a position on it.” But Comcast isn’t worried: in a statement last night to the Post, a Comcast spokesperson acknowledged the company has seen the proposed amendments, but remains, he said, “confident that the pro-competitive, pro-consumer benefits like faster Internet speeds and improved video options resulting from the transaction are compelling and will result in approval from the state.” (Capital New York)
