Netflix, Cogent Tried to Manipulate Backbone Internet, Alleges Comcast

Netflix and Cogent deliberately sent Internet traffic down channels that couldn’t handle the load, to try to secure free interconnection, Comcast Executive Vice President David Cohen alleged Wednesday on a conference call. It was held to publicize Comcast’s reply comments (http://bit.ly/Y8xgIm) filed Tuesday at the FCC in docket 14-57 in response to petitions to deny its proposed purchase of Time Warner Cable.

In replies, a blog post and on Cohen’s call, Comcast also said (http://bit.ly/Y8v8AB) Discovery Communications and other programmers tried to bargain support for the transaction in exchange for favorable carriage terms. (See separate report in this issue.) In replies, Comcast also said statements from public interest groups condemning the TWC deal are a rehash of old anti-consolidation arguments, and that most objections to the deal are not transaction specific, so they're “irrelevant to the Commission’s analysis in this proceeding.”

Netflix “deliberately sent its traffic on routes that could not support it, and ignored other routes that could easily have handled it,” said Comcast. “Netflix was never forced to choose the routes it used.” Comcast’s failing to provide its customers with the broadband speed they paid for “unless Netflix also pays a ransom” is “extortion,” said Netflix Wednesday in an emailed response to Comcast’s filing.

Netflix’s references to the interconnection agreement with Comcast in its petition to deny the TWC deal should not be considered by the commission because they aren’t transaction specific, Comcast said. “Netflix will use any proceeding, in any context, to try to shift the costs for carrying its content onto the backs of others.” Netflix has also changed its tune on the interconnection agreement since the agreement was finalized, Cohen said. The Comcast filing contains declarations from a Comcast official and an Internet peering expert on “misrepresentations” made by Netflix and Cogent about the interconnection deal, Cohen said.

Cogent’s opposition to Comcast/TWC “are no more transaction-related than Netflix’s,” Comcast said. Cogent “makes its money by charging edge providers for transit costs and is desperate” to prevent competition from Comcast, the cable company said. The transit market is vibrantly competitive, and that “refutes both Cogent’s and Netflix’s theoretical harms from the Transaction,” said Comcast. Cogent had no immediate comment.

Comcast also disputed Dish Network claims that the TWC deal will let Comcast create “chokepoints” for over-the-top video competitors. Dish’s concern that Comcast would prioritize its own content in the “last mile” of its network is prevented by Comcast’s agreement to follow the FCC 2010 net neutrality order, Cohen said. The same commitment also prevents Comcast from creating Internet “fast lanes”, Comcast said. The third concern raised by Dish, that Comcast could throttle down on competitors’ video at interconnection points, “is also demonstrably wrong” Comcast said. “Any content provider can reach Comcast’s network through multiple routes without having a direct business relationship (paid or otherwise) with Comcast, and those routes have significant available capacity today for any provider’s traffic.” Dish’s attacks were also not transaction specific, Comcast said.

Programmers such as Discovery are trying to use Comcast/TWC to promote their own financial interests, Comcast said. “Motive can inform credibility,” said Cohen. Comcast said Wednesday that since the TWC deal was announced, it has been “confronted by an unprecedented onslaught of requests to renegotiate existing affiliation agreements with programmers to provide more carriage and/or additional compensation.” Such “asks” are usually “accompanied by promises of support for the transactions” if they're met, Comcast said. If Comcast had agreed to all of the requests, the transactions would have added more than $5 billion in programming costs to customer’ bills, Cohen said. “We are always talking to our distribution partners about realizing fair value for our content across all consumer platforms,” said Discovery in a response posted online Wednesday (http://bit.ly/1pdsT5Q). Comcast is trying to divert attention from the issue of discounts it will likely demand from programmers post-merger, Discovery said.

Opponents of Comcast/TWC haven’t shown that approving the deal would “disserve the public interest,” Comcast said. Public interest attacks on the deal have raised issues that aren’t transaction specific, which it said are “extended riffs on a generalized ‘big is bad’ theme,” and “overheated rhetoric.” Issues like net neutrality and video competition should be addressed in their own proceedings rather than in the merger docket, Comcast said. Cohen said he saw no evidence that the FCC would impose conditions on Comcast/TWC so onerous that Comcast would walk away from the deal. Comcast and TWC aren’t competitors, and comments characterizing them as such are based on “a misapprehension of the facts,” he said.