When Netflix opposed Comcast's looming merger with Time Warner Cable on Monday, the streaming video company did so by raising net neutrality concerns. It argued that Comcast could use its newfound power to charge a toll for content that might compete with its own video offerings — a toll like the one that Netflix already found itself paying to improve the quality of streaming for Comcast customers. Comcast wasn't too happy about that, of course, firing back that it was Netflix's decision to cut out the middleman and work directly with Comcast to speed things up, and that the fee is standard practice for companies that offer "transit service" to quickly move data between networks.
But in a new blog post, Netflix now claims that Comcast isn't truly offering "transit service." It accuses Comcast of extorting content companies and its own customers by charging twice for the same content.
"Comcast is double dipping by getting both... to pay for access to each other."
In the blog post, Netflix explains that while transit networks like Level3 and Cogent help carry traffic to every network on the internet, Comcast isn't performing that role. Comcast isn't even helping Netflix move the traffic — according to Netflix — but simply acting as a gatekeeper for its own customers. Yet those customers are already theoretically paying Comcast for access to whatever internet content they request, including Netflix, no? "In this way, Comcast is double dipping by getting both its subscribers and Internet content providers to pay for access to each other," argues Netflix VP of content Ken Florance.
Netflix also suggests that Comcast intentionally allowed its connections to existing transit providers like Cogent and Level3 to clog up in order to force the issue, but it's not clear who is actually at fault. No one wants to pay to upgrade the pipes if they can pass the costs to someone else.
In a response to Netflix's latest attack, Comcast declined to directly address specific claims, but again accused Netflix of bending the truth and attempting to make Comcast pay the cost of transporting Netflix data. "Comcast has a multiplicity of other agreements just like the one Netflix approached us to negotiate, and so has every other Internet service provider for the last two decades," writes Comcast. "And those agreements have not harmed consumers or increased costs for content providers - if anything, they have decreased the costs those providers would have paid to others."
The center of a raging debate on net neutrality
This issue — charging a potentially discriminatory fee for access to certain kinds of content — is bigger than Comcast, Time Warner Cable, and Netflix, though. It's also at the heart of a raging debate on net neutrality right now. The FCC apparently wants to make discriminatory fees normal and legal as long as companies only charge "commercially reasonable" rates, and will soon vote on new rules that could make those fees okay.
Update April 24th, 5:55PM ET: This article has been updated to add Comcast's response to Netflix's accusations.