Comcast Accused Of Putting Up 'Toll Booth' For Web Video Providers
- November 29, 2010
The same day that modem manufacturer Zoom Electronics alleged that Comcast was violating net neutrality principles, a second company, Level 3 -- which earlier this month was named primary backbone Internet service provider for Netflix -- also accused the cable giant of acting contrary to open Internet standards.
Level 3 said on Monday that it was recently informed by Comcast of a new fee to transmit online movies to subscribers. "By taking this action, Comcast is effectively putting up a toll booth at the borders of its broadband Internet access network, enabling it to unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity delivered content," Level 3 said in a statement. "This action by Comcast threatens the open Internet and is a clear abuse of the dominant control that Comcast exerts in broadband access markets as the nation's largest cable provider."
News of the allegations spurred consumer advocates to renew calls for net neutrality regulations, and also to reiterate warnings that Comcast's pending merger with NBC Universal could prove anticompetitive. "On its face, this is the sort of toll booth between residential subscribers and the content of their choice that a Net Neutrality rule is supposed to prohibit," Public Knowledge legal director Harold Feld said in a statement. "In addition, this is exactly the sort of anticompetitive harm that opponents of Comcast's merger with NBC-Universal have warned would happen -- that Comcast would leverage its network to harm distribution of competitive video services, while raising prices on its own customers."
Comcast's public policy counsel Joe Waz called Level 3's position "duplicitious" in a blog post. "Comcast has long established and mutually acceptable commercial arrangements with Level 3's Content Delivery Network (CDN) competitors in delivering the same types of traffic to our customers," Wax said, adding that Comcast had offered service to Level 3 on the same terms as to its rivals.
"Level 3 is trying to gain an unfair business advantage over its CDN 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," Waz said. --Wendy Davis
At the core of this issue is the next battle of mobile bandwidth except that Comcast is trying to establish a precedent with cable.
Notwithstanding the growing issue of saturated spectrum capacity in 3G networks, the emergence of 4G LTE networks where A/V/S (ATT, Verizon, and Sprint) will compete for mobile streaming services, threatens cable and wireline networks because the router and TV is no longer the centric point of consumption.
Comcast knows that DVR time shifting coupled with content streaming to IP enabled devices (Slingbox, Roxio...) will break the pricing model for cable content.
The big issue is that people no longer want to pay for a predetermined group of non-premium channels of which approx 60% are really paid programming or shopping sites.
Once you move control to the viewer as to what, when and where they want to consume content, the distribution network revenue model falls apart.
The real threat to Comcast and channel providers like HBO will be companies like Netflix or TV content aggregators (Hulu is one but a bad example), that use the web to push to any enabled device (hello iPAD and Apple's iTunes distribution site).
The cellular carriers are using Comcast as a proxy fighter who, if Comcast wins the tiered pricing for bandwidth battle in court, can claim precedence for doing the same on the wireless backbones. This could spell the end of the fixed pricing for data mobile services (upload/download rich media will be priced by the gigabyte).
My sympathy goes more to the wireless carriers because of the heavy investments required to keep bandwidth viable to service growing mobile customers.
With respect to Comcast, they are less than 5 years away from suffering the same fate as ATT and others when people switched from landlines to mobile phones.
Once people start using the internet over mobile more than cable or wireline access, watch the price for data services be set by the wireless carriers.
If Comcast wins, the price will stay higher and the wireless providers will match these prices. If Comcast loses, it should offer premium pricing on download speeds in excess of 10Mbs, like in Korea, and discount pricing below 5Mbs to compete with 4G networks.
If I were Comcast, I would offer a basic $9.99 monthly price for Internet at 3Mbs to keep subscribers. This would put pressure on A/V/S to keep mobile data pricing plans reasonable.
Then there is another scenario - Google. If they really wanted to level the playing field, they would work with Harbinger Wireless who owns LTE 4G satellite [Skyterra] and 4G ground network [LigthSqaured] to provide the backhaul network to the "last mile, closest cell tower" point of Harbinger's network that is going nationwide.
If the other WiMax vendors join the effort, then cable will become an option, not a requirement.
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