Comcast demands fees for Web movie viewing, Level 3 says

Comcast has demanded that broadband backbone provider Level 3 Communications pay it a recurring fee for delivering video traffic to Comcast customers, Level 3 said Monday.

Comcast said it would cut off its own customers' access to the movies and other Web traffic unless Level 3 paid the fee, Level 3 said in a press release.

The Comcast decision violates network neutrality principles that the U.S. Federal Communications Commission approved in 2005, Level 3 said. Comcast successfully challenged the FCC's enforcement of the net neutrality principles when, earlier this year, a U.S. appeals court threw out its ruling against the broadband provider slowing peer-to-peer traffic on its network.

Comcast countered by saying Level 3 has not accurately portrayed negotiations between the two companies. Level 3 is being "duplicitous" and asking for special treatment that other content delivery services don't get, said Joe Waz, Comcast's senior vice president for external affairs.

Level 3 announced Nov. 11 that it would be the primary delivery partner for streaming video service from Netflix.

Comcast informed Level 3 on Nov. 19 that it would begin charging the backbone provider for transmitting online movies and other content to Comcast customers, Thomas Stortz, Level 3's chief legal officer, said in a statement.

A week ago, "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," Stortz said in the statement.

But the negotiations with Level 3 are similar to other "long-established and mutually acceptable" commercial agreements that Comcast has with other content delivery services, Waz said in a statement.

"Comcast offered Level 3 the same terms it offers to Level 3's [content delivery] competitors for the same traffic," Waz said. "But Level 3 is trying to undercut its ... competitors by claiming it's entitled to be treated differently and trying to force Comcast to give Level 3 unlimited and highly imbalanced traffic and shift all the cost onto Comcast and its customers."

Level 3 wants to pressure Comcast into accepting "more than a twofold increase in the amount of traffic Level 3 delivers onto Comcast's network -- for free," Waz added.

Level 3 has called for commercial negotiations when network traffic between providers is out of balance, as is now the case between Level 3 and Comcast, Waz said. "We are happy to maintain a balanced, no-cost traffic exchange with Level 3," he added. "However, when one provider exploits this type of relationship by pushing the burden of massive traffic growth onto the other provider and its customers, we believe this is not fair."

The timing of Comcast's actions are curious, given rumors that the FCC plans to act on formal net neutrality rules during its Dec. 21 meeting, said Matthew Wood, associate director at the Media Access Project (MAP), a communications policy group favoring stronger net neutrality rules.

"That is exactly the kind of thing that we're trying to prevent from happening, some sort of paid prioritization or payment for the privilege of terminating your traffic with a particular ISP's customers," Wood said. "The type of thing they're describing ... is exactly the reason that we need to have rules in place."

Opponents of stronger net neutrality rules have often suggested that there have been few examples of broadband providers selectively blocking or slowing Web traffic. "The problems seem to keep cropping up without us doing much stirring to find them," Wood said.

Comcast's efforts to collect recurring fees from Level 3 go "well beyond" filtering or prioritizing Web traffic, Stortz said. "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," he said. "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."

Level 3 will continue to work with Comcast to solve the issue, Stortz said. But the company does not want a special deal not available to other backbone providers, he added.

Also on Monday, modem manufacturer Zoom Telephonics filed a complaint against Comcast with the FCC. Zoom complained that Comcast is requiring an "unreasonable, irrelevant, time-consuming and costly" process before independent modem makers can be certified for use on Comcast's broadband network.

The certification program is a violation of the FCC's net neutrality principles, alleged Zoom, MAP and other net neutrality advocates.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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