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Comcast allegedly demanded more money from a high internet video provider, or threatened to disconnect its customers. The move marks a bold assault on net neutrality.  (Source: CFC Oklahoma)
Legislation may stop the "toll booth" practice, though

Comcast is no stranger to controversy, with a penchant for aggressive cost saving measures.  It ran afoul of the U.S. Federal Communications Commission when it began throttling users' traffic, such as torrents or peer-to-peer connections (with regard for their legality).

Now Comcast appears to have landed itself in another mess with Level 3 Communications' Chief Legal Officer, Thomas Stortz, accusing it of demanding money in order to continue to allow Comcast customers to access Level 3's high speed video.  In essence, if true, that would represent Comcast spitting in the face of the net neutrality movement, and making a bold move towards a "toll booth" web as Level 3 puts it.

Mr. Stortz writes:

On November 19, 2010, Comcast informed Level 3 that, for the first time, it will demand a recurring fee from Level 3 to transmit Internet online movies and other content to Comcast’s customers who request such content. By taking this action, Comcast is effectively putting up a toll booth at the borders of its broadband Internet access network, enabling it to unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity delivered content. 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.
On November 22, after being informed by Comcast that its demand for payment was ‘take it or leave it,’ Level 3 agreed to the terms, under protest, in order to ensure customers did not experience any disruptions.
Level 3 operates one of several broadband backbone networks, which are part of the Internet and which independent providers of online content use to transmit movies, sports, games and other entertainment to consumers. When a Comcast customer requests such content, for example an online movie or game, Level 3 transmits the content to Comcast for delivery to consumers.
Level 3 believes Comcast’s current position violates the spirit and letter of the FCC’s proposed Internet Policy principles and other regulations and statutes, as well as Comcast’s previous public statements about favoring an open Internet.
While the network neutrality debate in Washington has focused on what actions a broadband access provider might take to filter, prioritize or manage content requested by its subscribers, Comcast’s decision goes well beyond this. 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 – even though Comcast’s subscribers requested the content. With this action, Comcast demonstrates the risk of a ‘closed’ Internet, where a retail broadband Internet access provider decides whether and how their subscribers interact with content.
It is our hope that Comcast’s senior management, for whom we have great respect, will closely consider their position on this issue and adopt an approach that will better serve Comcast and Comcast’s customers.
While Comcast’s position is regrettable, Level 3 remains open and willing to work through these issues with Comcast. However, Level 3 does not seek any ‘special deals’ or arrangements not generally available to other Internet backbone companies.
Given Comcast’s currently stated position, we are approaching regulators and policy makers and asking them to take quick action to ensure that a fair, open and innovative Internet does not become a closed network controlled by a few institutions with dominant market power that have the means, motive and opportunity to economically discriminate between favored and disfavored content.

Comcast is America's largest cable internet provider, so if Level 3's claims are indeed legitimate, net neutrality advocates -- including corporations like Google -- should be very concerned.  After all, other cable providers will likely follow in Comcast's lead.

If Comcast indeed succeeds in this bid, it would likely mean that the cost of internet services for users would greatly increase.  Advertising would no longer be enough to sustain sites like YouTube or Facebook, and they would have to switch to subscription fees.

The U.S. Congress and the FCC are working on legislation to prevent this kind of "pay to play" practice.  The pending legislation has generally enjoyed bipartisan support, though it has a few vocal critics, including Senator John McCain (R-Ariz.).

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RE: McCain
By Darkefire on 11/30/2010 11:04:27 AM , Rating: 3
Yeah, because that worked so well for the finance industry. Wall Street has proven that if you let big business run free it will do what any large predator will do in an environment where it's bigger than anything else (read: eat itself silly and stomp out any competition). Net neutrality by definition is going to have to involve government intervention, since the corporate world has demonstrated time and time again that they are incapable of playing nice with consumers or each other.

RE: McCain
By superPC on 11/30/2010 11:34:51 AM , Rating: 2
that's exactly right. when adam smith first think of how capitalism and corporation works the dutch east india company and the british east india companies were the only megacorporation and multinational corporation out there. and both of those companies were in decline at the time he was alive. he wouldn't think the predatory nature of those company would be sustainable and in the end market forces would be in balance and brings benefit to all. guess what? it took hundreds of years for those two megacorporation to go bankrupt. and that's without goverment oversight, with numerous goverment bailout and caused innumerable suffering of millions of people.

large multinational firms are doing what VOC and british east india company did hundreds of years ago. they prey on the week, illinformed, and with limited choices (or sometimes no choice at all). do we really want to see history repeated?

RE: McCain
By Kurz on 11/30/2010 1:46:49 PM , Rating: 2
You are missing something, they are being protected by the government in some fashion be it subsides, contracts, tax breaks etc.

RE: McCain
By straycat74 on 11/30/2010 11:57:57 AM , Rating: 2
You would be correct if your assumptions were correct. We all know government has purposely allowed no competition in the cable market place locally.
Do you really not know how bad loans were encouraged by the government? It used to be not too long ago you had to have 20% down to own a home. Why do you think the houses we grew up in were so much smaller? Who bought all of these bad bundled loans? Fannie and Freddie. Do you think banks would loan money to high risk people without a place to unload them? Do you think the government didn't know what was happening?
Don't do the wall street is evil thing. Look to the government for why things were allowed and encouraged.

RE: McCain
By jhie on 11/30/2010 12:18:33 PM , Rating: 2
Actually it is Wall Street (GS in particular) as Matt Talibai explains very clearly in his new book Griftopia. They are behind most of the government part too.

RE: McCain
By SandmanWN on 11/30/2010 1:33:17 PM , Rating: 2
Actually it was government, I read a book about it (haha). Gov demanded corporations to make these loans or lose funding and they did the best they could with a bad situation. (the book told me so)

So you read a book that points in one direction. Doesn't make it so. High risk loans aren't even close to a good business decision and there is enough history to show that banks never pursued this area of home loans for good reason. The only reason you ever consider to take on these loans would be because someones sticking a knife in your back and forcing you to do so. If you are a lender you don't push for zero interest time periods, adjustable apr's, no down payments, etc etc. You want money up front, down payments, credit checks, set rates... C'mon man.

RE: McCain
By zxern on 11/30/2010 1:55:24 PM , Rating: 2

Why do people keep removing the human element from these discussions?

High risk loans aren't good for the business as a whole, but the guy writing your loan isn't the business, he's the loan officer looking at a big bonus at the end of the year depending on how many loans he makes. What does he care if the loan is good or bad?

There is no need for a knife just a lack of oversight and common sense.

RE: McCain
By SandmanWN on 12/1/2010 10:33:34 AM , Rating: 3
The loan officer... Really???

The loan officer is one of the lowest guys on the totem pole. The loan officer is given a set of guidelines to work with. Thats all they can do. They are nobody employees doing what the people above tell them to do.

You aren't even in the right ballpark on this discussion.

RE: McCain
By Kurz on 12/1/2010 11:04:26 AM , Rating: 1
Exactly... usually the loan officer is just the face man.
Collecting information for the approval Board.

Its up to the Board to decide if they want to take on the loan. And Lying to the board will cost you your job and further job opportunties.

RE: McCain
By jhie on 11/30/2010 3:25:02 PM , Rating: 2
There is ample evidence in where the b/trillions of dollars ended up. Talibai's book just does a very good job of discussing it. High risk loans are indeed a bad business decision -- except Wall Street (GS in particular) gamed the system through the derivative markets to where high risk loans were extremely lucrative to them. Until the ultimate meltdown. They got to keep the money. In fact they were paid extra through the bailouts. This was not a free market dynamic, it was corruption of the system.

RE: McCain
By SandmanWN on 12/1/2010 10:28:31 AM , Rating: 3
except Wall Street doesn't give out loans. They just bet for or against the company doing so. What you are saying has no relevance to the bad decision making that lead to banks giving out these loans to begin with.

You are looking at step 2 of the downfall and trying to point fingers. At that point finger pointing is irrelevant because the market is doing whatever it can to make good of a bad situation that is out of their control.

RE: McCain
By jhie on 12/1/2010 11:52:37 AM , Rating: 2
Wall Street created a huge market for garbage mortgages through their wack derivatives. The lenders didn’t care because they were immediately unloading the mortgages through Wall Street’s (GS particularly) securitized bundles. The lenders could sell any mortgage no matter how bad or fake it was, so the dynamic was rack n stack. Wall Street didn’t care because they covered all the bad mortgage securities through AIG credit default swaps. When it all melted down, the federal government decided it was better to cover all of their bad investments than to have the entire economy melt down (that was their decision anyway). Lack of oversight and fair audit allowed this to go to Ponzi scheme levels. All you have to do to verify this is look at who made the b/trillions of dollars in “profits” and bonuses and who ended up in debt to pay for it. The WS banks made a killing on grifted mortgage bundles and credit default swaps – and then made one again on the bailout. All you have to do is look at the fantastic scale of the dollar amounts involved to recognize WS's central (and ongoing) role.

RE: McCain
By bitterman0 on 11/30/2010 1:14:52 PM , Rating: 2
I strongly agree. Free market economy can balance itself on its own; it is government's meddling what creates great imbalances.

RE: McCain
By zxern on 11/30/2010 1:49:53 PM , Rating: 2
It sure will just like the real estate markets and the stock markets eventually correct themselves. Just ignore all the suffering that happens in the meantime. How long do want to suffer with a closed off internet before these companies collapse under their own weight? Are you really eager to go back to the days of aol and compuserve?

I'm not and I'll happily take some government regulations over decades of a closed internet.

Free market just like Communism would work great if everyone were content with what they had. But people aren't, they lie cheat and steal. Thats why communism doesn't work and thats why a free market doesn't work.

RE: McCain
By bitterman0 on 12/1/2010 3:14:12 AM , Rating: 2
It sure will just like the real estate markets and the stock markets eventually correct themselves. Just ignore all the suffering that happens in the meantime.

We were talking about government meddling affecting real estate markets by encouraging private enterprises (banks) to relax loan requirements via Freddy Mac and Fannie Mae (feds) buying/underwriting risky loans.

If the government was not meddling that much in the first place, the real estate bubble would have never happened to the extent we had it.

Stop thinking that the government has all the answers. It doesn't.

RE: McCain
By The Insolent One on 11/30/2010 2:15:11 PM , Rating: 3
Just like free market energy provided by companies like, Enron?

Just like all the ma bell companies?

Just like all the newly minted cable companies?

What do all of these have in common? HUGE barriers to entry like government funded infrastructure that was essentially given to the companies to "free market." They were also given a "franchise" to operate in a given place with little/no competition.

The free market only routinely works on businesses where the barriers to entry are low (under millions of dollars). When markets and barriers reach epic numbers, the number of players is severely limited and they have little to no motivation to keep prices in check.

RE: McCain
By Exodite on 11/30/2010 3:43:55 PM , Rating: 2
Zxern said pretty much all I wanted on the topic already but to add to that it's probably good to keep in mind that the ideal state of affairs under a completely free market, for a company that is, is commonly known as 'a monopoly'.

It's far better to be the only provider of a particular set of goods or services than forced to compete with others on quality and price.

Companies knows this, that's why we get oligopolies and price fixing when they can't niche themselves comfortable into a monopoly.

The 'free market' needs government oversight and regulation to function, believing otherwise is as naive as believing in a plan economy. Likely more so.

"The Space Elevator will be built about 50 years after everyone stops laughing" -- Sir Arthur C. Clarke

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