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

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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TOPICS: Tech Industry
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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.

Topic: Tech Industry

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  • Ha

    > "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,"

    Yeah, 'open' as in filtering, blocking and otherwise interfering with customers' IP traffic. Notice how they claim openness and yet whine about being bound by the FCC's rules at the same time.

    There are no 'open' ISP's until they allow customers to run any protocol, including servers, without interference at the full speed to which they subscribed. The smokescreen about 'bandwidth hogs' needs to end; they oversell capacity that they don't have, counting on everyone not trying to use it at once. Netflix pays for the bandwith they use on their end and anything on top of that is extortion, plain and simple. The internet was based on the idea of two-way end-to-end connectivity, and they're steadily trying to turn it into a one-way cable TV clone.
    :x
  • OMG

    I was at the mercy of Comcast for 10 years. 10 long years of miserable customer service, overpriced service and open mockery. (Yes, I was told by a Comcast employee that since I don't live in an area where Comcast has competition, they don't see a reason to give me a better rate.
    HVITALE9
  • LOL

    Yeah, Comcast and TWC merging would be a clear violation of the Sherman and Clayton Anti-trust acts.
    I've gotten service from both of them, and they are riddled with the same filtering problems what with images from some websites being "disappeared" while I never had that problem with any other ISP's.
    Fortunately I was never with either of them long enough at any time to get the rate hikes after the promotional period was over.

    But the LOL is at Netflix, who dislikes Comcast and TWC because those two ISP's are very likely to charge Netflix more for bandwidth, and very likely to throttle Netflix down on their traffic just so they can sell more TV/OnDemand subscriptions.
    Jacob VanWagoner
  • RE: Comcast's statements

    RE: "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."

    There's an unfortunate telling in not only the quote above but also in the claims that NetFlix pays Comcast additional fees for the delivery of their service that Comcast is a steaming pile of lies.

    1) Publicly speaking, we can verify that Comcast receives funds from NetFlix. If these payments exceed Comcast service, then there's question as to why Comcast is charging them for something they claim to not do. If NetFlix is paying Comcast to equal the field, then Comcast is not neutral, as they are degrading NetFlix. If Comcast is accepting payment from NetFlix for priority, then Comcast is again not neutral, as neutrality says all are equal and thus you cannot give priority to a company just because they pay you.

    2) Per the quote above, I'm not sure how blocking Comcast's merger puts NetFlix fees on the entire Internet. The suggestion that an expectation of neutrality places a burden on the entire Internet suggests that Comcast is publicly anti-neutrality and finds it profitable to non-neutrally route traffic - something Comcast keeps denying in phrases but confirming in action and between-the-lines wording.

    A pure, 100% neutral Internet may not be a perfect thing, as I believe verified viruses and trojans, spam, etc. should be a universal responsibility to find ways to eradicate them. The choice to limit general, legal content, is unreasonable. At the very least, I think every ISP should be made to announce in easy to read, non-fine-print, front page announcements as to what their filtering is. If your reasons are legit, you won't mind your customers knowing where the degradation is.

    For a time, I was part of a WISP (Wireless ISP) and we were traffic shaping torrents and any other heavy traffic. Intentionally degrading service was not the goal. Managing the best performance possible was. Things like torrents, if allowed to run at 100% speed 24-7 bottlenecked our bandwidth. From our perspective, we had to balance what the customer thinks they're paying for and what the other customers cannot do because of the torrent users traffic. In small numbers, the oversell equation is a little tricky, but the general bandwidth calculations are to 5x oversell. If I have a 100mb backbone, I can sell multiple smaller connections up to an accumulated 500mb of service. Personally, I find that this also only works if your speed packages are less than 1/5 of your backbone and generally less noticeable 1/(4xOversell) or in this sample, 1/20 or about 5mb packages.

    Where possible, don't always kill the traffic, but allow just select services to degrade when the network is under heavy load.
    ct2193
  • What a crock

    They already have a sort of Monopoly already. In any given area/city/Village, ComCast, TimeWarner or Cox, each have contracts and within that area they are the ONLY service.. so they don't have to play nice as it is. You cannot just switch from TWC to Cox.. not unless you pick up your house and move it into an area where Cox has the contract! if those three got together then it would be an obvious monopoly, but, in essence, it already is. Oh sure, you can switch to AT&T DSL.. (zzzzzzz), or Disc.. oh wait, they only have a DSL connection for data.. so, if you don't like the deal your local cable (Broadband) has, what ARE you going to do? Do without? If they wanted to drive out Netflix with high bandwidth charges.. I guess the mail DVD part of their business would grow again, eh?
    Putertechn