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Comcast levies 'toll' on Netflix's video delivery firm

Comcast made a move during the past several weeks that may threaten Netflix and other video services, according to the New York Times. It levied a "toll" to Netflix's contracted video delivery service, called Level 3, which the company felt forced to pay in order to "ensure customers did not experience any disruptions." This brings a new wrinkle to the "network neutrality" debate.

In effect, without charging Netflix or its own cable broadband customers extra, but instead charging the provider of the video stream itself, Comcast gets to test the waters of segregated pricing, the very imbalance that supporters of net neutrality seek to counter. In this instance, Level 3, the contractor that dearly wants Netflix's business, is forced to pay extra to keep it. Eventually, this could lead to Netflix raising its own prices in order to cover the expenses of its streaming contractors. Neither Netflix or Comcast responded to the New York Times when approached about the matter. (Comcast is in final negotiations to buy NBC Universal; is a joint venture between NBC Universal and Microsoft.)

There isn't yet a net neutrality law that requires broadband providers to allow any and all traffic to and from their customers' homes, but for the most part, that's how landline broadband works. That's even what Google and Verizon said in their infamous pledge to keep home broadband "neutral" while making cellular wireless data streams a premium domain. They did allow in their proposal for "broadband providers to offer additional, differentiated online services." But that would, presumably, not come at the cost of boxing out competitors.

The whole thing comes at a tricky time for the cable giant. The NYT points out that, as the FCC and Department of Justice look over Comcast's bid to buy NBC Universal, one stipulation may be that Comcast must keep its "Internet network open to competitors." So, to that end, would Comcast, soon to be a joint owner in Hulu Plus, charge their own affiliated video providers the same "toll"?

In a statement clearly aimed at both the Netflix-loving public and the regulators currently deciding the fate of the Comcast-NBC deal, Level 3's chief legal officer Thomas Stortz said:

Level 3 believes Comcast’s current position violates the spirit and letter of the FCC’s proposed Internet Policy principles and other regulations and statutes, as well as Comcast’s previous public statements about favoring an open Internet. While the network neutrality debate in Washington has focused on what actions a broadband access provider might take to filter, prioritize or manage content requested by its subscribers, Comcast’s decision goes well beyond this. With this action, Comcast is preventing competing content from ever being delivered to Comcast’s subscribers at all, unless Comcast’s unilaterally-determined toll is paid — even though Comcast’s subscribers requested the content. With this action, Comcast demonstrates the risk of a ‘closed’ Internet, where a retail broadband Internet access provider decides whether and how their subscribers interact with content.

What this really shows is that no matter how much campaigning happens for something that guarantees "neutrality," there will certainly be a million loopholes for broadband providers to test. Even if they ultimately fail, tricks like this can make them some decent money in the meantime.