Comcast, Netflix partner feud over 'open Internet'

A dispute between US cable giant Comcast and a networking company that streams online movies from Netflix is being cast as a potential battle for an open Internet.

The tussle between Comcast and Level 3 Communications Inc., a Colorado-based firm, is being closely watched by proponents of "net neutrality," the principle that Internet service providers should treat all Web traffic equally.

The disagreement became public Monday when Level 3 complained that Comcast for the first time 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 tiff in which Level 3 was seeking to gain an unfair advantage over its rivals.

Whatever the case, the conflict drew the attention of US regulators on Tuesday with Julius Genachowski, the chairman of the Federal Communications Commission (FCC), saying that his staff would be looking into it.

Genachowski, whose efforts to promote "net neutrality" have met resistance from telecom companies and Republican lawmakers, also 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 what is known as "broadband backbone network," transmitting online content such as movies and games to Comcast for delivery to consumers.

Earlier this month, Level 3 signed a contract with movie rental giant Netflix that Comcast said would result in Level 3 sending five times more traffic to Comcast than Comcast sends to Level 3.

Under a long-running and standard industry arrangement known as "peering," Comcast said that it had asked Level 3 to pay a fee to make up for the traffic imbalance.

Level 3, however, accused Comcast of "effectively putting up a toll booth at the borders of its broadband Internet access network" and charging for online content which 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.

Further complicating the issue, is Comcast's proposed acquisition of NBC Universal, a deal that is awaiting the approval of US authorities and one that would give Comcast, the largest US cable television and high-speed broadband provider, 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," the Colorado company 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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