An additional fee to stream Netflix movies to Comcast customers has created a real-life example for advocates of Net neutrality. Comcast imposed the fee on Level 3 Communications, part of the Netflix broadband backbone. Level 3 called the fee a "toll booth" on competition and appealed to regulators, including the FCC.
The fight for Net neutrality now has a practical case that could affect the future of streaming media on the web. Comcast is requiring that a major Internet service provider pay an additional fee for delivering Netflix's streaming movies.
The fee is being imposed on Level 3 Communications, one of the broadband backbone networks that Netflix uses to provide its newly expanded streaming service. The movie service, which made its name by providing DVD rentals in red envelopes via the U.S. Post Office, has steadily been increasing the films available for immediate streaming over broadband connections. Recently, it launched a streaming-only membership option.
'Threatens the Open Internet'
On Monday, Level 3 issued a statement that it had been informed on Nov. 19 by Comcast that there will be a "recurring fee from Level 3 to transmit Internet online movies and other content to Comcast's customers who request such content."
Level 3 called the fee a "toll booth" allowing Comcast to "unilaterally decide how much to charge for content which competes with its own cable-TV and Xfinity delivered content."
Level 3 added that the action "threatens the open Internet and is a clear abuse of the dominant control" Comcast has as the nation's largest cable provider. The backbone provider said it accepted the payment terms "under protest" to ensure customers would not experience disruptions.
Level 3 said it is asking regulators and policy-makers for action to ensure that "a fair, open and innovative Internet does not become a closed network controlled by a few institutions."
Comcast said its payment demand was being "misportrayed" by Level 3, and was only part of the "commercial negotiations" between the companies. It said the fee "has nothing to do with Level 3's desire to distribute different types of network traffic," but instead reflects the cable company's "established" commercial arrangements with content delivery networks.
'Information' vs 'Telecommunications' Service
In addition to offering a wide variety of premium cable movie channels and on-demand films that conflict with Netflix, Comcast is also expected to launch TV Everywhere next month. That service will allow Comcast subscribers to watch movies and TV shows over the web from a variety of devices.
Comcast has been at the center of the Net-neutrality storm. A Federal Communications Commission ruling against Comcast for imposing bandwidth restrictions on a file-sharing application -- without first informing customers -- was seen as the opening battle in the Net-neutrality fight, since the app could be used to distribute movies. In April, a federal court found that the FCC overstepped its authority under its current classification of Net providers as "information services."
Since then, FCC Chairman Julius Genachowski has proposed a modified reclassification of broadband service as a "telecommunications service." That would allow the agency to require that Comcast and others transmit all content and non-malicious applications equally -- the core feature of Net neutrality.