Net neutrality: Netflix continues fight for 'strong' rules, responds to Comcast accusation of extortion

Netflix (NASDAQ: NFLX) reiterated its support of "clear and strong Internet protections" from the FCC in order to support the "virtuous circle" of broadband investment and business applications stemming from such rules.

In a Sept. 15 filing that was released to the public on Wednesday, Sept. 24, Netflix urged the FCC to not only "prohibit pay-for-priority arrangements over the last mile"--an issue that has plagued the top SVOD provider as it tries to reach subscribers on networks owned by recalcitrant ISPs--but also to extend those protections to interconnect points where its signal moves from the "broader Internet" to "terminating access networks" (e.g., those troublesome last-mile networks).

Netflix's choice of terms in its filing isn't arbitrary. The provider has been advocating for net neutrality rules from the FCC that classify the Internet as a telecommunications service, thereby falling under guidelines in Title II of the 1996 Telecommunications Act.

Meanwhile, Comcast (NASDAQ: CMCSA) accused Netflix and others of extortion in an exhaustive 337-page comment on net neutrality filed with the FCC on Wednesday.

"Netflix, Cogent, and Dish, in particular, have advanced new self-serving theories of vertical harm that precisely match up with their business objectives of avoiding normal competitive forces and gaining negotiation advantages," Comcast wrote in the filing. "Their principal focus concerns Internet traffic exchange, which (1) they attempt to portray as a market failure when, in fact, that marketplace is working extremely well, while (2) claiming that the Transaction will exacerbate these purported 'market failures.'"

Netflix's response on Wednesday to Comcast's accusation of extortion reflected its frustration. "It is not extortion to demand that Comcast provide its own customers the broadband speeds they've paid for so they can enjoy Netflix," Netflix said in a statement to the media. "It is extortion when Comcast fails to provide its own customers the broadband speed they've paid for unless Netflix also pays a ransom."

Netflix petitioned the FCC on Aug. 25 to deny the merger of Comcast with fellow cable giant Time Warner Cable (NYSE: TWC). Netflix said it has a vested interest in the decision because Comcast already has played an intrusive role in Netflix's ability to do business by bottlenecking Netflix video traffic until the provider agreed to pay for better access to Comcast's network.

"When Netflix approached Comcast regarding the lack of uncongested settlement-free routes available to its network, Comcast suggested that Netflix return to using CDNs, which Comcast could charge access fees that would then be passed on to Netflix, or use a Tier 1 network like AT&T which charged its own access fees," Netflix wrote in its petition. "Comcast made clear that Netflix would have to pay Comcast an access fee if Netflix wanted to directly connect with Comcast or use third-party CDNs. In essence, Comcast sought to meter Netflix traffic requested by Comcast's broadband subscribers."

In related news, Google (NASDAQ: GOOG), documenting its Sept. 15 meeting with the FCC on net neutrality, cemented its stance that settlement-free peering is a "win-win" for all parties involved. Google has been pointing out since May that it does not charge fees for preferred access to its fiber networks currently operating in areas like Kansas City and Provo, Utah.

For more:
- see Netflix's comments (PDF)
- see Google's filing (PDF)
Deadline has this article

Related articles:
Comcast says merger foes guided by self-interest, not consumer benefit
FCC's Clyburn comes out for strict net neutrality rules for wireless
FCC net neutrality comments surpass 3M, beat Janet Jackson 'Wardrobe-gate' for record
Netflix peering dispute with Verizon, Comcast intentional, pundit says

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