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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 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.

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