Internet backbone provider Level 3 Communications claims that Comcast has suddenly started charging it fees to deliver Internet video to Comcast subscribers. Level 3 recently signed a deal to deliver streaming movies for Netflix.In a press release, Level 3’s Chief Legal Officer Thomas Stortz claims that Comcast approached it on November 19th to demand a recurring fee for delivering online movies and other video. Four days later, Comcast reiterated its demand, and Level 3 paid up to avoid service disruptions to customers. Level 3 is complaining to regulators in hopes of getting rules passed that would prevent companies from establishing these kinds of “toll” payments.
This is a perfect example of why it’s so hard for technology companies to change the current TV distribution model. Comcast has no interest in allowing its Internet subscribers to undercut its core TV and video-on-demand business. After all, Comcast pays content owners to distribute their content–why should it allow ISPs a free ride?
Cord-cutting is a nice dream for the high-tech industry, but the incumbents aren’t going to roll over and let it happen easily.
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