Shortly after Comcast announced its proposed purchase of Time Warner Cable, Netflix and Comcast made another announcement: Netflix agreed to pay Comcast Corp. an undisclosed fee to ensure Netflix content streams smoothly to Comcast customers.
Netflix, which reportedly accounts for nearly 30% of all Internet traffic during peak traffic, is basically paying millions for faster and steadier access to Comcast's subscribers. But if this is a pay to play arrangement, will all content companies be expected to follow suit?
Even Netflix CEO Reed Hastings is concerned about the precedent the deal is setting. On a company blog post, Hastings wrote: "Some big ISPs are extracting a toll because they can -- they effectively control access to millions of consumers and are willing to sacrifice the interests of their own customers to press Netflix and others to pay. Though they have the scale and power to do this, they should realize it is in their long term interest to back strong net neutrality. While in the short term Netflix will in cases reluctantly pay large ISPs to ensure a high quality member experience, we will continue to fight for the Internet the world needs and deserves."
One vocal critic of the proposed merger, Sen. Al Franken (D-Minn.) has warned Justice Department officials that the deal "could compromise the open nature of the Internet."
“Simply put, the Internet belongs to the people, not to huge corporations,” Franken wrote in a letter to Renata Hesse and David Gelfand, the two deputy assistant attorneys general in the Antitrust Division of the Justice Department who are studying the proposed merger. "Comcast’s proposed acquisition of Time Warner Cable could disrupt this balance of power, resulting in higher costs and fewer choices for consumers."
Franken's main concern is that the deal could be detrimental to consumers, who might have to pay more for broadband, and small businesses, who presumably wouldn't have the money to shell out money for faster internet service. With the planned acquisition of Time Warner Cable, Comcast will become the cable provider to nearly one-third of American homes and the high-speed Internet company for almost 40% of American homes, according to The New York Times.
"I am very concerned that Comcast could use its clout in the broadband market to dictate the content consumers receive and the prices they pay, and these concerns are only intensified by Comcast’s proposal to acquire Time Warner Cable," said Franken.
Responding to Franken's letter, Comcast issued a statement saying that the deal "will bring millions more Americans under the Open Internet rules as soon as our deal closes. We fully expect that the FCC will have in place Open Internet rules that will apply to all companies by the time our current condition from the NBCUniversal deal expires in 2018. That condition was always meant as a bridge to enforceable rules that would be applicable to all companies in the industry. Comcast has supported Open Internet rules since they were first proposed and is the only company that is currently required to abide by them."
As part of its acquisition of NBCUniversal in 2011, Comcast agreed to abide by the FCC’s net neutrality guidelines until 2018. Franklin said that there is a "question" about what will happen after 2018. Read his full letter here.