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The War Between Comcast And Netflix Is Heating Up

Netflix reed hastings

Comcast and Netflix have been fighting for months, and things just got worse.

In February, the two companies cut a deal that should ensure quality television and movie streams for Comcast customers for the foreseeable future. Netflix paid Comcast an undisclosed sum, and in exchange Comcast will connect directly to Netflix’s servers, improving streaming quality for all Netflix content.

But just this week, CEO Reed Hastings blasted Comcast’s plans to acquire Time Warner in an earnings call. In a note to investors that favoured “strong net-neutrality,” Hastings said that the Comcast-Time Warner is an unacceptable accumulation of monopoly power, and cited the deal he had struck with Comcast’s chief Brian Roberts as an example of that power being abused.

Today, Netflix took this even further, publishing a blog post titled “The Case Against ISP Tolls.”

In it, Vice President of Content Delivery Ken Florance reasserts that Netflix is against the Comcast-Time Warner merger, saying, “We’re very concerned that a combined Comcast-TWC will place toll taking above consumer interests and will use their combined market power to the detriment of a vibrant and efficient Internet.”

He claims that Comcast is trying to charge both cable subscribers and content providers for the right to reach each other, which he calls “double dipping”:

In sum, Comcast is not charging Netflix for transit service. It is charging Netflix for access to its subscribers. Comcast also charges its subscribers for access to Internet content providers like Netflix. In this way, Comcast is double dipping by getting both its subscribers and Internet content providers to pay for access to each other.

Comcast’s Senior Vice President of Corporate and Digital Communications Jennifer Khoury responded in a statement, calling Netflix’s argument a “House of Cards”:

As we and other industry observers have already noted, Netflix’s decision to reroute its Internet traffic was all about improving Netflix’s business model. While it’s understandable for Netflix to try to make all Internet users pay for its costs of doing business (as opposed to just their customers), the company should at least be honest about its cost-shifting strategy.

The statement also reaffirmed Comcast’s commitment to an “open Internet” and “to supporting appropriate FCC rules to ensure that consumers’ access to the Internet is protected in a legally enforceable way.” This was in reference to the FCC’s new rules regarding how it governs Internet access.

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