Comcast Busted: New Tolls for Netflix Aren't All You Should Worry About
In the past 24 hours Comcast has been exposed committing blatant abuses of its power over all things media.
The New York Times reported last night that the cable giant has threatened to block popular online movie service Netflix unless the company that streams its films paid new and extortionate tolls. Earlier in the day, Comcast was caught red-handed trying to smother the marketplace for competitive Internet modems designed for use on its network -- a violation of fundamental Net Neutrality principles that allow you to choose what devices you want to use.
These are just the latest domino in a history of abuse by a company determined to become the 21st century's media gatekeeper. If Comcast gets away with these violations, it will be the beginning of the end of the experiment in information democracy called the Internet. What more reason does the Federal Communications Commission need to step up -- for once -- and protect the openness that is central to a better, more participatory and diverse media.
Taken as a whole, these abuses show us what a media monopoly looks like in the Internet age --- one company, consolidating its media power to squash competitors, to stifle innovation and free speech, and to gouge consumers.
Here are seven reasons we must stop an out-of-control Comcast:
1. Killing Off Competition: NetFlix
Comcast is the largest nation's largest broadband provider and pay-TV company. It has leveraged that access to our homes to become the third-largest telephone company in the country with the tentacles of its communications networks reaching across more than a third of the country.
In most these regions, Comcast's market power reigns uncontested, with few to no other companies vying to compete with the cable giant for this package of services. Comcast wants it to stay that way. So much so that it's now moving to kill off competitors. On Monday, Level 3, the service that streams Netflix movies to consumers revealed that Comcast had threatened to cut off the pipe to its customers unless Level 3 pays a steep new toll for transit. The toll was non-negotiable -- no payment, no access -- meaning no Netflix for the 17 million broadband customers who connect via Comcast.
Not by coincidence, Comcast happens to offer its own movie streaming service: Xfinity. By erecting a tollbooth at the edge of its network, the company can price competitors out of the market and ensure that its one online video offering remains the only choice for consumers.
2. Stifling Innovation: Zoom Modems
Just hours before the Netflix story broke, Comcast was accused of violating another basic tenant of the open Internet and the free market. In a complaint filed Monday with the FCC, modem manufacturer Zoom Telephonics presented evidence that exposed Comcast restricting consumer access to innovative new devices. Comcast was doing this by placing unreasonable conditions on cable modems Zoom wants to sell to Comcast customers.
Comcast would prefer users rent their modems from Comcast -- at a monthly fee that over time far exceeds the cost of modems bought on the open marketplace. By blocking the manufacture of independently produced modems, Comcast can lock in these exorbitant rental rates in a marketplace where it already controls about 40 percent of the national cable connections.
If Zoom's complaint is accurate, these practices violate both the letter and the spirit of the Communications Act and the FCC's open Internet principles. It's the same pattern of anti-competitive behavior that the company showed when it throttled BitTorrent (see below). By erecting anti-competitive barricades and stifling innovations in the modem marketplace, Comcast is violating the open Internet principle it repeatedly promised the FCC it would respect.
3. Consolidating Media Power: NBC Takeover
Some may have thought that in the age of the Internet the era of huge companies controlling more media was behind us. But with Comcast hell-bent to take over NBC Universal, we are given an unwelcome glimpse at the future of media consolidation.
For consumers, the merger would give Comcast unprecedented control over what you can watch and how you can watch it. They'll leverage this power to suffocate online TV -- like Netflix, Miro and iTunes -- in favor of their limited offerings. Comcast already raises its rates to the tune of 10 percent a year. With less competition, they'll jack up prices even more. Even if you don't have Comcast at home, you could end up paying more to get NBC shows. Comcast will also have an incentive to promote NBC shows over local or independent programming, making it even harder to find alternative voices on the cable menu.
And this will just be the first in a wave of media mega-mergers. "As the economy recovers, we will see more proposed media industry combinations," explains FCC Commissioner Michael Copps. "While I look at each proposed transaction on its individual merits, my long-standing skepticism about the harms imposed by so few controlling so much persists."
4. Censoring Free Speech: Vinh Pham
Comcast customer Vinh Pham got caught in the black hole that is Comcast customer service. All he wanted was to get his Internet and cable working without opting for Comcast's "Triple Play," which included phone services as well.
"I do not want your freaking Triple Play," Pham says. "Who the hell still uses landlines, let alone buy landlines through their cable company? Stop trying to sell me [something] I don't want."
Every time he tried to make the change his account crashed. So Pham took matters into his own hands, fixing his modem so that he actually received the services he was being charged for on his monthly bill.
But after Pham shared his experience via his personal blog, Comcast decided to lower the hammer.
Comcast contacted the company that hosts Pham's blog and demanded the entire blog be censored. (This is nothing new. They had a similar reaction when one of their on-air hosts decided to protect a distinguished service award for Fox News Channel's Bill O'Reilly.)
Reporting on the affair, blogger-activist Phil Dampier wrote: "When cable giants like Comcast trample all over free speech (and their paying customers), it's teaches a valuable lesson why giving them a chance to grow even larger through a merger with NBC-Universal is a dangerous mistake."
5. Lobbyists, Lawyers and Lies: Cohen's Kumbaya
Earlier this month, Comcast's top lobbyist, David Cohen, declared Net Neutrality an issue over which Washington needn't concern itself any longer. "It's time to put this [Net Neutrality] debate behind us," he said to the strains of Kumbaya. "Check the box and move on."
Now, don't think this means Comcast has changed its tune on the importance of the open Internet. It's still trying to kill Net Neutrality. It's just making a softer sell to convince Washington to trust Comcast to protect the rights of Internet users. "Real self-regulation" by the industry itself is the answer, Cohen told a room of nodding lobbyists and lawyers.
But the only thing you can trust about Comcast is that it will seek to boost its bottom line and serve shareholders by any means possible. That's the nature of corporations. And naturally, the public shouldn't expect corporations like Comcast to look out for its best interests. Public policy is designed for that role. Are you listening FCC?
6. Blocking Internet Access: BitTorrent
Comcast gave us a taste of a world without Net Neutrality when an Associated Press investigation in 2007 caught the cable giant red-handed, jamming use of popular file-sharing applications.
Despite mounting evidence of Internet blocking, the company refused to come clean and disclose its "network management" practices. A coalition of Net Neutrality supporters and legal scholars filed a complaint with the FCC.
In response to the public outcry and a mountain of evidence, FCC Chair Kevin Martin sanctioned Comcast for violating Net Neutrality. Martin ruled that Comcast had "arbitrarily" blocked Internet access and failed to disclose to consumers what it was doing. But the ink was barely dry on the FCC order before Comcast sued the FCC in federal court, challenging not only the agency's ruling but its entire authority to protect Internet users.
7. Blocking Public Access: Harvard
In 2008, The FCC called a public hearing at Harvard University to weigh whether Comcast was blocking public access to the Internet (see above). In characteristic fashion, Comcast responded by blocking public access to the hearing itself. The company deployed paid seat-fillers to bar others from entering an official FCC event.
While Comcast seat-warmers snoozed, a collection of Harvard and MIT scholars, Internet advocates, industry leaders, engineers and policymakers nearly all agreed that Internet blocking has serious consequences for each and every one of us.
That the Boston hearing was marred by Comcast's efforts to stack the crowd in its favor -- leaving concerned citizens out in the cold -- demonstrates again why we can't trust a media monopoly with an Internet that is vital to our democracy.
Those who should ultimately decide the Internet's future are people like you and me -- everyone who uses the Internet every day and in every way. That's why every citizen needs to get involved right now.
Comcast's most recent abuses come just days before FCC Chairman Julius Genachowski is to announce a vote on new Net Neutrality rules.
If the FCC stays on the sidelines, Comcast will turn the Internet into cable TV. Its runaway abuse of media power will impact pretty much everything we do online.
This is a moment of truth for Julius Genachowski. The FCC chairman can no longer endlessly weighing whether to take action. The public must tell him to move now to restore the agency's authority to protect consumers against a new generation of monopolists.
© 2010 Huffington Post