Com­cast sets up on­line ‘Toll Booth’

The Pak Banker - - Company& -

NEW YORK: Com­cast Corp. has be­gun im­pos­ing a fee on In­ter­net mid­dle­man Level 3 Com­mu­ni­ca­tions Inc., one of the com­pa­nies that Net­flix Inc. has hired to de­liver movies and TV shows to Web cus­tomers.

Com­cast, the largest U.S. cable TV com­pany, has set up an In­ter­net "toll booth," charg­ing Level 3 when­ever cus­tomers request con­tent, the Broom­field, Colorado-based com­pany said in a state­ment to­day.

Level 3 plans to com­plain to U.S. reg­u­la­tors who may en­act so-called net-neu­tral­ity rules next month. The Fed­eral Com­mu­ni­ca­tions Com­mis­sion is seek­ing to bar phone and cable providers from in­ter­fer­ing with le­gal traf­fic on their net­works. The rules are backed by Pres­i­dent Barack Obama and com­pa­nies led by Google Inc., EBay Inc. and IAC/In­terAc­tiveCorp. Phone and cable com­pa­nies say rules aren't needed and may hurt in­vest­ment.

"This ac­tion by Com­cast threat­ens the open In­ter­net and is a clear abuse of the dom­i­nant con­trol that Com­cast ex­erts in broad­band ac­cess," Thomas Stortz, Level 3's chief le­gal of­fi­cer, said in the state­ment. "With this ac­tion, Com­cast is pre­vent­ing com­pet­ing con­tent from ever be­ing de­liv­ered to Com­cast's sub­scribers at all, un­less Com­cast's uni­lat­er­ally de­ter­mined toll is paid."

Com­cast, which is seek­ing reg­u­la­tory ap­proval to ac­quire ma­jor­ity own­er­ship of NBC Uni­ver­sal, de­fended the fee in a state­ment, say­ing it is based on "long es­tab­lished and mu­tu­ally ac­cept­able com­mer­cial ar­range­ments" with Level 3's peers.

Level 3 is pre­par­ing to more than dou­ble the traf­fic it puts on the cable provider's net­work and has tried to pres­sure the com­pany into ac­cept­ing it for free, Joe Waz, Com­cast's se­nior vice pres­i­dent for ex­ter­nal af­fairs, said in an e-mailed state­ment.

Level 3 an­nounced on Nov. 11 that it will carry films and TV shows for the Web stream­ing ser­vice of­fered by Net­flix. Net­flix ac­counts for more than a fifth of the traf­fic down­loaded dur­ing the peak hours of 8 p.m. and 10 p.m. in the U.S., ac­cord­ing to a re­port from broad­band net­work com­pany Sand­vine Inc. Level 3 has said it will add ca­pac­ity to its net­work to han­dle the ex­tra load from Net­flix's movies.

Jen Howard, a spokes­woman at the FCC, and Steve Swasey, a spokesman for Net­flix, de­clined to com­ment. Com­cast fell 1 cent to $20.21 in Nas­daq Stock Mar­ket trad­ing to­day. -Bloomberg

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