updated 06:55 pm EST, Mon November 29, 2010
Level 3 claims Comcast extorting fees for video
(Update: Comcast response) Level 3 today raised alarms with claims that Comcast was engaging in anti-competitive behavior with a new charge for online video. The Internet backbone provider said that Comcast had suddenly started charging extra for video to its customers and threatened to block video traffic from Level 3, which supplies streams for Netflix and other major providers. It agreed to pay the fee to avoid a disruption but accused Comcast of setting up a "toll booth" deliberately designed to prevent competition with both cable TV and its own Internet features.
The fee lets Comcast "unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity delivered content," Level 3 said. "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."
It further argued that Comcast would likely run into trouble with the FCC, since the video-specific fee directly violated proposed net neutrality rules and contradicted Comcast's assertions that it valued an open Internet. The approach showed the risks of a closed Internet often sought after by carriers, Level 3 said, since it would effectively let a provider like Comcast dictate what customers would be allowed to see.
Comcast had been caught secretly blocking BitTorrent traffic in 2008 and was pressured by the FCC into using a more neutral approach. It has long argued that it had the 'right' to manage its network but had honored the FCC's warnings until today.
Level 3 called for "quick action" from politicians to legally prevent such terms and prevent monopolies like those it suggested Comcast might have.
Comcast hasn't formally responded to the complaint but is likely to deny any wrongdoing.
The move is an extremely risky one for Comcast as it comes just as the company has been pushing the FCC to approve a merger with NBC. Internet video has been a core subject of the FCC's worries about the deal; Comcast had just recently argued that it should be allowed to withhold NBC video from those it considers competitors. Plans to charge Level 3 and others extra would fuel FCC doubts about the deal and could ultimately lead the FCC to legally force not just offering NBC content to providers like Netflix and iTunes but to prevent it from unfairly charging extra or otherwise discriminating against rivals.
Update: Comcast senior VP Joe Waz responded by accusing Level 3 of being "duplicitous" and claimed that a previous deal between itself and Level 3 had skewed in favor of Level 3. It argued that it was unfair to push the cost of a major increase in Internet video on to the Internet provider without extra compensation.
"When one provider exploits this type of relationship by pushing the burden of massive traffic growth onto the other provider and its customers, we believe this is not fair," Waz said.
Internet providers have increasingly tried to persuade politicians that deregulation and the freedom to throttle traffic at will has been due to the "exaflood," or an exponentially increasing amount of Internet data that networks couldn't handle without throttling, metering or other limits. Netflix may account for a fifth of peak US traffic. The view has been controversial, as critics have noted both that the growth has often been less than claimed and that those supporting the exaflood concept have usually been paid by carriers.