Netflix Responds to FCC Peering Info Request

Data Delivered in Context of Comcast-TWC Merger Review
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Streaming service Netflix this week responded to the Federal Communications Commission's request for data on interconnection, providng the agency with a raft of figures, almost all of them redacted as highly confidential.

The FCC's Dec. 19  request came in its review of the Comcast/Time Warner Cable merger, and at least the commission will see what Netflix says it costs to deliver its service, including paying for interconnection.

Netflix, which has asked the FCC to block the Comcast-TWC deal, talked of the six "large terminating" Internet service providers that have "demanded payment," and the ones who have gotten it -- Comcast, TWC, AT&T and Verizon.

In response to FCC questions, Netflix outlined its arguments that MVPDs are trying to undermine online video distributors by offering programming on unacceptable terms and attempting to keep the exclusive rights to some TV shows -- for example, the last five episodes of a linear TV show -- for their own VOD services.

Of Comcast, in particular, Netflix said, "[Its] behavior has indicated it understands exclusivity is important to OVDs, and so it has deliberately sought to undermine OVDs’ efforts to  secure exclusivity."

The company also said that, as a general matter, the proposed merger would enhance Comcast’s incentive and ability to foreclose OVDs from accessing the programming on the terms they need to be competitive.

In response to that same charge leveled by a group of deal critics, Comcast said recently that it "has licensed substantial amounts of content to Apple in connection with the platforms for which Apple has approached NBCUniversal," adding, "And of course NBCUniversal provides substantial content to many other OVDs, and recently has licensed programming to Sony for its new linear Vue service."

"In short, there is nothing to this allegation," Comcast concluded.

Netflix reiterated its argument that Comcast was "unwilling to open sufficient capacity to satisfy the needs of its own customers," and added that congestion at interconnection points can turn a promised 25-Mbps service -- the FCC's new table stakes for ISPs -- into a 2-Mbps service.

"As a result, the consumer would not be receiving the benefit of the 25-Mbps broadband connection that she paid her ISP to provide," Netflix said.

Netflix argued that Comcast congested Netflix's routes in order to extract fees for interconnection, while Comcast said Netflix created the problem itself to make the political point in Washington and try to avoid payment.

Comcast executive VP David Cohen dismissed the charge last fall in a conversation with reporters.

"This was a business dispute," he said of the paid-peering fight. "This was part of a strategy by Netflix, and maybe by Netflix and Cogent, to create a problem in the backbone in order to make a broader point that had nothing to do with the consumer interest, which was that they wanted to make the point that it was better for them to have free interconnection."

A Netflix spokesman responded at the time: "It is not extortion to demand that Comcast provide its own customers the broadband speeds they've paid for so they can enjoy Netflix. It is extortion when Comcast fails to provide its own customers the broadband speed they've paid for unless Netflix also pays a ransom."

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