Netflix has come out in opposition of Comcast's proposed purchase of Time Warner Cable, writing in a letter to shareholders that the merger would give the combined service provider "even more anticompetitive leverage" to charge businesses "arbitrary" fees before they can access customers. This view is, of course, no surprise: Netflix has already been pressured by Comcast into paying what it views as a net-neutrality violating fee in order to improve streaming service to its subscribers, and it's certainly fearful that it'll have to pay more of these down the road and that Comcast could even eventually come to directly compete on streaming with a service of its own.
"Comcast could control high-speed broadband to the majority of American homes."
"If the Comcast and Time Warner Cable merger is approved, the combined company’s footprint will pass over 60 percent of US broadband households," Netflix writes, noting that this figure includes Comcast's proposed divestiture of equipment that would bring it down to serving just 30 percent of the US market after the deal closed. Netflix says that with the decline of DSL, "Comcast could control high-speed broadband to the majority of American homes."
As a household name and a common example of internet success, Netflix's view on the potential merger of major internet service providers certainly carries some weight. Senator Al Franken even specifically called on Netflix CEO Reed Hastings to deliver his opinion on the deal, noting that he was "uniquely positioned to gauge the risks." Franken now has his answer. Netflix is already concerned with Comcast's abilities to push it around as it is — if the deal goes through, it'll have even more to worry about.
But despite his company's strong issues with Comcast and the proposed purchase, Hastings did have kind things to say about how Comcast would manage should the merger go through. "Brian Roberts is incredibly thoughtful," he said of Comcast Corporation's CEO during a call with investors. "I'd say if there's anyone that you wanted to trust with controlling half of the US internet, you might pick Brian Roberts. He's very thoughtful, very long term about it, very reasonable."
"But I don't know that we want anybody to control half of the US internet," Hastings added. "That's the real basis of our objection to the merger."
Comcast, of course, takes offense to the idea that it might be violating net neutrality in any way, issuing a press release that objects to Netflix's remarks:
"Netflix's opposition to our Time Warner Cable transaction is based on 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. In fact, 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."
Comcast accuses Netflix of unfairly singling it out when other companies like Google and Yahoo also pay for better connections between subscribers and content. The company also reiterates its position that there would still be competition in the ISP market if the deal goes through, relying on the shaky logic that expensive cellular data plans and nacent upstarts like Google Fiber can count as meaningful competition for the might of a combined Comcast and Time Warner Cable.
"Netflix should be transparent that its opinion is not about protecting the consumer or about net neutrality," writes Comcast. "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."
Update April 21st, 7:20PM ET: This article has been updated to include comments made by Reed Hastings during Netflix's earnings call, as well as Comcast's response to Netflix's remarks.