Is Comcast ‘Putting Up a Tollbooth’ on the Internet?

Fueling the controversy over net neutrality, broadband backbone provider Level 3 has accused Comcast of “putting up a tollbooth” on the Internet.

According to a Level 3 statement issued yesterday, Comcast will demand a recurring fee from the company to transmit online movies from services such as Netflix and other content to Comcast customers.

Comcast’s action could give regulators new ammunition to propose rules to ensure that Internet providers — such as Comcast — do not discriminate against content they don’t own by slowing, blocking or limiting access. It could complicate the approval of the Comcast-NBC Universal transaction, leading regulators to impose conditions for the deal’s approval.

“By taking this action, Comcast is effectively putting up a tollbooth at the borders of its broadband Internet access network, enabling it to unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity-delivered content. This action by Comcast threatens the open Internet and is a clear abuse of the dominant control that Comcast exerts in broadband access markets as the nation’s largest cable provider,” said Thomas Stortz, chief legal officer for Level 3.

The dispute has all the hallmarks of the public retransmission consent squabbles.

Comcast responded that it offered the same terms to Level 3 as it had its competitors, and any other terms would give it an unfair advantage over other content delivery networks that also do business with Comcast.

“Level 3 is trying to gain an unfair business advantage over its CDN [content delivery network] competitors by claiming it’s entitled to be treated differently and trying to force Comcast to give Level 3 unlimited and highly imbalanced traffic and shift all the cost onto Comcast and its customers,” said Joe Waz, svp, external affairs and public policy counsel.

Net neutrality has become a hot issue in the nation’s capital. Though a federal court found the Federal Communications Commission lacked the authority to sanction Comcast in a previous case, the FCC is expected to propose rules to ensure “net neutrality” in its Dec. 21 meeting.