Imagine what would happen if a major automaker owned all the highways in Sonoma County. This would give the automaker freedom to charge a toll for competitor’s vehicles to use the highway or to ban competitor’s vehicles from using the highway altogether, effectively controlling what we drove and giving it power over its competitors.
Last year Comcast began the process of acquiring NBC, a deal that would put control of one of the largest producers of television programming in the hands of the largest cable provider in the nation. If Comcast is allowed to buy NBC they will be able to control both the production and distribution of media. Antitrust hearings by the federal government have caused delays in the purchase being finalized.
During the hearings Comcast promised they would not use their control over both production and distribution of media to gain an unfair advantage over their competition. However, in recent weeks a dispute between Comcast and video streaming company Level 3 Communications showed just how willing Comcast is to use its size to control competition.
Level 3 recently won a bid to be the Internet provider for Netflix streaming service. Akamai, the company that provided this service prior to Level 3, is a Content Delivery Network. This type of network provides copies of videos and music hosted in different physical locations so they can be accessed without creating bottlenecks on the network. These companies provide an important service to the web as a whole, but are minor players. In contrast, Level 3 is a Tier 1 network; these networks are large and sometimes referred to as the backbone of the Internet. This type of network shares its infrastructure, effectively without charge, through peering agreements with the other Tier 1 networks, and this is at the heart of the Comcast/Level 3 conflict.
Comcast is not a Tier 1 network; however they own a large share of the residential network infrastructure. While they already have a paid-peering agreement with Level 3, Comcast wants to change the rates they are charging due to the deal reached with Netflix. Level 3 has argued that this is the equivalent of setting up a toll booth on the internet.
This seems reasonable until you remember that Comcast is also in the business of providing movies and television to people’s homes. In other words, they are in direct competition with Netflix for the streaming video market.
This is the reason why net neutrality is important. Companies that control the networks making up the Internet should not be allowed to price data from different places at different rates or control the speed that different types of data are allowed to travel on their network. The victim of Comcast’s demands is the consumer, not Level 3 Communications or Netflix. It is the consumer who will bear the brunt of this higher cost of operation. If Comcast does not relent in the demands they have made of Level 3 Communications and Level 3 refuses to pay, many people will not have access to the services they paid for.
Since Comcast is not afraid to hold their network ransom over the source of data, how can we believe they would not use their content library and control of the networks that deliver that content to force other companies to bend to their will.