Netflix slams Comcast deal as ‘arbitrary tax’

Netflix CEO Reed Hastings repeated the company’s commitment to net neutrality and came out against “interconnection” deals like the one it recently made with Comcast. 

“To ensure the Internet remains humanity’s most important platform for progress, net neutrality must be defended and strengthened,” Hastings said in a company blog post.

Hastings reiterated his company’s support for the Federal Communication Commission’s net neutrality rules, which kept Internet providers like Comcast and Verizon from blocking or slowing access to certain websites before they were struck down by a federal court earlier this year. The agency has announced it will rewrite the rules based on the court’s ruling.

{mosads}Without net neutrality rules in place, Internet providers are able to slow access to bandwidth-heavy sites like Netflix and pressure those websites to pay interconnection fees, Hastings wrote.

Last month, Comcast and Netflix announced an interconnection deal that would allow Netflix to connect directly to Comcast servers, providing faster service for Netflix subscribers who access the site through Comcast’s Internet service.

According to Hastings, Internet providers like Comcast degrade Netflix quality for subscribers who pay for high-speed Internet access, citing limited capacity.

“Once Netflix agrees to pay the [Internet service provider] interconnection fees, however, sufficient capacity is made available and high quality service for consumers is restored,” he said.

These deals are an “arbitrary tax” against Web companies like Netflix, Hastings said.

“If this kind of leverage is effective against Netflix, which is pretty large, imagine the plight of smaller services today and in the future,” he wrote. 

Hastings committed to continuing the fight for net neutrality.

“Netflix believes strong net neutrality is critical, but in the near term we will in cases pay the toll to the powerful [Internet service providers] to protect our consumer experience,” he wrote.

He also pointed to Comcast as “an industry leader in supporting weak net neutrality,” but noted that other large Internet providers do not necessitate these interconnection deals.

He cited Cablevision, saying that it already practices “strong net neutrality and for their broadband subscribers, the quality of Netflix and other streaming services is outstanding.”

Hastings’ company blog post comes after Comcast CEO Brian Roberts said earlier this week that both companies benefit from the interconnection deal they reached.

Touting the business reasons for Internet providers to support net neutrality, Roberts said in an interview with USA Today that the interconnection deal with Netflix would benefit both companies’ customers.

“Their cost, I believe, at Netflix will be down and give a better experience to their consumers and to our consumers,” he said.

On Thursday, Comcast Executive Vice President David Cohen pushed back on Hastings’s claims about Comcast’s commitment to net neutrality.

“There has been no company that has had a stronger commitment to openness of the Internet than Comcast,” Cohen said in a statement, pointing to commitments it made to respect net neutrality as part of its 2011 acquisition of NBC Universal.

Comcast has supported the FCC’s net neutrality rules and is “now the only [Internet service provider] in the country that is bound by them,” he said.

Cohen also drew a distinction between the boundaries of the net neutrality rules and the interconnection deals Hastings referenced in his blog post.

“The Open Internet rules never were designed to deal with peering and Internet interconnection, which have been an essential part of the growth of the Internet for two decades,” he said.

“Providers like Netflix have always paid for their interconnection to the Internet and have always had ample options to ensure that their customers receive an optimal performance through all [Internet service providers] at a fair price.”

Some net neutrality advocates have long argued that the FCC should include interconnection deals in its net neutrality.

With his blog post, Hastings is “certainly drawing attention to” that debate, Michael Weinberg, Public Knowledge vice president, said.

As the FCC rewrites its net neutrality rules, it can reconsider whether to include interconnection deals as an element of the open Internet, Weinberg said, noting that the FCC process is formally called the “Open Internet” process, not the “net neutrality” process.

“There’s a real opportunity for interconnection to create the problems that we associate with what we think of as the open Internet,” he said.

If Netflix is concerned about issues arising from interconnection arrangements, other companies either do as well or are likely to soon, Weinberg said.

Netflix is “the net neutrality canary in the coal mine,” he said.