Netflix blasts Comcast, TWC merger as 'not in the public interest'

Summary:Is Netflix's opinion on the proposed Comcast-TWC merger a valid point on monopolies, or a self-serving critique aimed at better deals for itself?

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Netflix has publicly opposed a proposed merger between Comcast and Time Warner Cable and has called the move anticompetitive, as it could grant Comcast a monopoly over high-speed broadband services in the United States.

The video streaming service said in a letter to shareholders on its first-quarter results (.PDF) that the proposed merger would allow Comcast to charge "unprecedented fees" from streaming services such as Netflix. CEO Reed Hastings and CFO David Wells wrote within the letter:

If the Comcast and Time Warner Cable merger is approved, the combined company's footprint will pass over 60 percent of US broadband households, after the proposed divestiture, with most of those homes having Comcast as the only option for truly high-speed broadband.

As DSL fades in favor of cable internet, Comcast could control high-speed broadband to the majority of American homes.

Speaking to the Financial Times, Hastings commented, "We respectfully think it’s not in the public interest to have one company control a majority of US residential internet [provision]. Our view is that the best remedy is to block the merger."

The objection comes after a Netflix announcement that prices will be raised for subscribers by one or two dollars a month, in order to give the streaming service additional funds to acquire content and improve streaming service infrastructure.

Netflix has been calling for stronger net neutrality laws to protect the open Internet, which in turn requires Internet Service Providers (ISPs) to give their customers equal access to content deemed lawful without tiered charges or restriction. In March, the firm agreed to pay Comcast "interconnection" fees for faster video delivery to subscribers, and said that this agreement has improved the streaming service for Comcast customers, but targeted AT&T's fiber U-Verse as a network providing "lower performance" than other ISPs.

AT&T is considering providing U-verse services in additional cities across the US — such as Chicago and Miami — with an eye to roll out fiber broadband and U-verse to 100 cities eventually.

In relation to this, Netflix has called for AT&T to directly connect to the firm's service without interconnection fees, which would "quickly improve their customers' experience," according to Netflix.

In response to Netflix's statement, Comcast said that while the company "is free to express its opinions," these opinions should be "factually based" rather than formed by "inaccurate claims and arguments."

"There has been no company that has had a stronger commitment to openness of the Internet than Comcast and we are the only ISP in the country that is currently legally bound by the FCC's vacated Net Neutrality rules," Comcast says. "One of the many benefits of our proposed transaction with Time Warner Cable will be the extension of Net Neutrality protections to millions of additional Americans."

This wasn't all. Comcast also took the opportunity to trade barbs with Netflix, stating:

Netflix should be transparent that its opinion is not about protecting the consumer or about Net Neutrality. Rather, it's about improving Netflix’s business model by shifting costs that it has always borne to all users of the Internet and not just to Netflix customers.

Topics: Tech Industry

About

Charlie Osborne, a medical anthropologist who studied at the University of Kent, UK, is a journalist, freelance photographer and former teacher. She has spent years travelling and working across Europe and the Middle East as a teacher, and has been involved in the running of businesses ranging from media and events to B2B sales. Charli... Full Bio

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