December 1, 2010

Comcast Accused Of Violating Net Neutrality

Comcast and a networking company that streams online movies from Netflix are in a potential battle for an open Internet.

Proponents of "net neutrality," the principal that Internet service providers should treat all Web traffic equally, are closely watching Comcast and Level 3 Communications Inc.

The disagreement became public on Monday when Level 3 complained that the cable giant was demanding a "recurring fee" from Level 3 to transmit online movies and other content to Comcast's customers.

Level 3 said Comcast's actions amounted to erecting a "toll booth" around its broadband network while Comcast said the matter was a simple commercial tariff in which Level 3 was seeking to gain an unfair advantage over its rivals.

The conflict drew the attention of U.S. regulators on Tuesday with Julius Genachowski, the chairman of the Federal Communications Commission (FFC).  He said that his staff would be looking into it.

Genachowski announced late Tuesday that the FCC would discuss open Internet rules at a December 21 open meeting.

"These rules would protect consumers' and innovators' right to know basic information about broadband service, right to send and receive lawful Internet traffic, and right to a level playing field, while providing broadband Internet access providers with the flexibility to reasonably manage their networks," the FCC said.

Level 3 operates as a "broadband backbone network," transmitting online content like movies and games to Comcast for delivery to consumers.

Level 3 signed a contract with Netflix earlier this month that Comcast said would result in the company sending five times more traffic to Comcast than Comcast sends to Level 3.

Comcast said that it had asked Level 3 to pay a fee to make up for the traffic imbalance.

However, Level 3 accused Comcast of "effectively putting up a toll booth at the borders of its broadband Internet access network" and charging for online content that competes with its own cable television programming.

"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," Level 3 said.

Comcast is currently trying to purchase NBC Universal but is waiting for the approval of U.S. authorities.  The acquisition would give Comcast an entertainment empire to rival that of The Walt Disney Co.

"After being informed by Comcast that its demand for payment was 'take it or leave it,' Level 3 agreed to the terms, under protest, in order to ensure customers did not experience any disruptions," Level 3 said.

Comcast senior vice president Joe Waz rejected the Level 3 accusations.

"There is nothing about this dispute with Level 3 that concerns an effort by Comcast either to resist carrying Internet video traffic or imposing new 'tolls' on it," Waz said in a blog post.

"This is all about Level 3 gaining an unfair advantage over its competitors by gaining enormous additional capacity at no cost to itself, instead shifting the financial costs to Comcast's high speed data customers," he said.

"The bottom line is that this is a good, old-fashioned commercial peering dispute," Waz said. "It is not about online video, it is not a net neutrality issue.

"And it does not involve putting 'toll booths' on the Internet."


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