Dispute Arises as Comcast Raises Fees to Stream Netflix

By MarketWatch | Tribune-Review/Pittsburgh Tribune-Review, December 1, 2010 | Go to article overview

Dispute Arises as Comcast Raises Fees to Stream Netflix


MarketWatch, Tribune-Review/Pittsburgh Tribune-Review


WASHINGTON -- Comcast Corp. is coming under scrutiny from regulators after it demanded higher fees to carry streaming Netflix videos over its cable network.

Julius Genachowski, chairman of the Federal Communications Commission, said Tuesday he will seek more information about a dispute involving Comcast and Level 3 Communications Inc., the company that distributes Netflix videos over the Internet.

For now, the dispute is unlikely to affect Netflix customers. Level 3 has agreed to pay higher fees to Comcast while it takes its complaint to regulators.

Comcast has demanded that Level 3 pay a regular fee because the number of Netflix videos downloaded over the cable network has soared. Level 3 is now sending far more Internet traffic over Comcast's network than Comcast sends over Level 3's network, the cable company said.

Level 3, for its part, has complained that Comcast is setting up a "toll booth" on the Internet to disadvantage its competitors and extract more money from them. Such an approach violates FCC guidelines on "net neutrality" that are meant to ensure fair treatment of all Internet traffic, Level 3 argues.

The dispute has flared up at an awkward time for Comcast, also the nation's largest Internet operator with nearly 17 million customers. Regulators are in the late stages of a review of Comcast's proposed purchase of the NBC Universal television network.

The FCC any day now is expected to announce new rules meant to promote net neutrality -- rules that could affect Comcast, AT&T Inc. and Verizon Communications Inc. in a dramatic way.

FCC guidelines prohibit network operators from discriminating against other Internet companies by blocking or slowing down access to their websites. …

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