It was obviously a little soon for everyone to claim that February's deal between
Last week, Netflix Chief Executive Reed Hastings fired a broadside at his supposed new partner over the issue of network neutrality, the principle that all services and content providers on the Internet should get equal access to an Internet service provider's customers. In a blog post, he said Netflix had agreed to pay Comcast a fee -- a toll, he called it -- "to protect our consumer experience."
But he warned that Netflix is willing to do so only "in the near term."
If you were Comcast, would you take that as a threat? You'd be wise to do so. Comcast, the biggest cable operator in the country, is about to face intense regulatory scrutiny in connection with its proposed $45-billion merger with
If so, he's got plenty of evidence to work with. Comcast's record on net neutrality is horrible. As we observed when its Time Warner Cable deal was announced, "It's a record of broken commitments to customers and regulators, and of corporate deception."
Comcast, in a response to Hastings issued over the name of David L. Cohen, its executive vice president, claimed "there has been no company that has had a stronger commitment to openness of the Internet than Comcast. " It mentions the
Yes, that's true. What Comcast doesn't mention is that it's bound by those rules because the FCC insisted on it as a condition of approving Comcast's acquisition of
Hastings makes the point that Comcast supports "weak" net neutrality, which forbids ISPs to interfere or restrict the choices made by end users of what content or services they want from the Web. He wants to see Comcast commit to "strong" net neutrality, which would prevent the cable operator from charging big providers, like Netflix or
That's the battlefield where the war between Netflix-like providers and ISPs like Comcast will be fought. The Netflix position is that its service is so popular that more customers will clamor to sign up with Comcast and insist on better broadband service, for which they'll pay Comcast more money, so their Netflix movies will look better. Hastings thinks Comcast should be satisfied with the subscription revenue and not try to squeeze his company for more.
The reason there's any fight over this at all is because ISPs such as Comcast, taking advantage of their effective monopolies over Internet service to the home, haven't resisted the temptation to give their customers mediocre performance at an inflated price. The technology and infrastructure exists for Comcast to give all its subscribers service good enough to show every Netflix video stream at high def, but why bother? If its customers think Netflix movies look lousy on their Comcast connections, they'll blame Netflix.
The ISPs' attitude was revealed last week by Jim Cicconi, an executive at
If regulators treated ISPs like the public utilities they have effectively become, battles like the Netflix-Comcast one wouldn't happen. Instead, the FCC's tolerance for poor ISP performance knows no bounds. Now the issue of net neutrality, and whether Comcast should get a big new opportunity to violate it, has landed in the lap of its new chairman, Tom Wheeler.
Wheeler says he's working on a new set of net neutrality rules. Hastings has plainly decided to try to put his thumb on the scale. But it's important to keep in mind that the rules may eventually boil down to who gets to reap the biggest profit from consumers, Netflix or Comcast, so it's probably not wise to think of either of them as being on the customer's side.
As happens whenever behemoths battle, the little guys get stomped. In this case, we the customers will be getting the bill; we just don't know yet whose name will be on the return address.