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11/30/2010
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Level 3 Charges Comcast Fees Threaten Open Internet

Dustup over Netflix transmission charges emerges as the FCC prepares to rule on net neutrality.

With the Federal Communications Commission about to make a decision on net neutrality, it now has a real-life example of what constitutes the open Internet, as web backbone provider Level 3 is complaining that Comcast is unfairly charging it to deliver data, specifically Netflix videos.

The issue arose days after Level 3 outbid Akamai on a contract to deliver Netflix content to large regions of the United States. According to market research studies, Netflix accounts for as much as 20% of broadband traffic during peak hours and Netflix business is growing rapidly. Akamai, which is a content delivery network in this situation, still continues as a supplier in some regions.

"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," said Thomas Stortz, Level 3's chief legal officer, in a statement, adding that, under pressure, it agreed to terms set by Comcast "in order to ensure customers did not experience any disruptions."

Although the issue concerns Netflix and the growth of streaming video, the video provider hasn't formally been cited by Level 3 or Comcast in the debate. As a side issue, Comcast has been in lengthy negotiations with the FCC to acquire NBC Universal. Rumors have suggested that the FCC could approve the NBC acquisition in return for Comcast agreeing to allow competitors to use Comcast's Internet access in an open manner.

Comcast responded that it has been carrying video for other high-speed Internet customers via commercial arrangements and doesn't see why Level 3 should be treated differently. "Level 3 is trying to change the rules of the game," said Joe Waz, Comcast's senior VP for external affairs, in a statement. "Comcast offered Level 3 the same terms it offers to Level 3's content delivery network competitors for the same traffic."

The brouhaha is just one of many that offers a backdrop to this month's FCC meeting, as it seeks to work out an agreement on broadband and wireless access with Congress waiting in the wings to critique it, kill it, or approve it. Also watching closely, no doubt, will be the United States Court of Appeals for the District of Columbia Circuit, which has already set a precedent of sorts on net neutrality in a ruling favoring Comcast.

For Further Reading

FCC Postpones Net Neutrality Vote

FCC Chair Pitches Restraint In Net Neutrality

Comcast Beats FCC In Net Neutrality Battle

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