Comcast’s Netflix Rejection Raises Net Neutrality Concerns

Comcast’s Netflix Rejection Raises Net Neutrality Concerns
May 1, 2012

Kenneth Artz

Kenneth Artz (iamkenartz@hotmail.com) is a freelance reporter for The Heartland Institute based in... (read full bio)

Since February, Comcast, the country’s largest cable company, has appeared at the center of a new net neutrality debate, with claims the company is threatening to block Netflix streaming content unless it gets paid a new fee.

At issue is whether Comcast would offer Netflix to its Xfinity subscribers in the form of an on-demand service or a billing partnership. Comcast says it has no interest in either arrangement.

Bartlett D. Cleland, policy counsel for the Institute for Policy Innovation, says there is nothing suspicious in Comcast’s decision to forgo a partnership with Netflix.

“The owners of the company, individual shareholders from retirees to teacher's pension funds, expect a company to maximize its profits and minimize its expenses. Too many observers fail to understand even the most basic tenants of business and hence cry out any time a company is, dare we say, competitive,” Cleland explains.

No Degraded or Blocked Access
Comcast currently offers its 22.3 million Xfinity subscribers a Netflix-like streaming service called Streampix. The service lets its customers stream 75,000 television shows and movies on multiple devices in and outside their homes.

Starting at $4.99 a month, Streampix is also available as part of some high-end cable packages. Netflix’s streaming package starts at $7.99 a month.

Richard Bennett, a senior research fellow with the Washington, DC-based, nonpartisan Information Technology and Innovation Foundation, says Comcast customers can use Netflix anyway, and many do, so there’s no issue of any blocking or degraded access on Comcast’s part.

“Netflix is negotiating with cable companies for bundling agreements that will enable it to expand its customer base, and Comcast doesn’t see any benefit from such an agreement for very obvious reasons: Compared to Streampix, Netflix is higher priced,” Bennett explains.

“Comcast is in a unique position relative to other cable companies because they own so much content through NBC Universal, so we can’t expect them to reach the same conclusions as others about content bundling deals. Netflix has more customers than Comcast already, so they aren’t hurt by Comcast’s lack of interest in bundling their service,” he says.

Strictly Business
Steve Titch, a policy analyst at the Reason Foundation, agrees this is purely a business decision.

“Netflix competes with Comcast's Xfinity on-demand service, and right now Comcast sees no benefit in partnering with Netflix. This, of course, may change if Comcast comes to see more synergies down the line. That's the way free markets work. Meanwhile, Netflix has plenty of other options, including the arrangements it has with manufacturers of TV and DVD players to package a Netflix Internet interface with the on-board software,” said Titch.

“I would say that Netflix, at the moment, has more leverage over Comcast, as Netflix has multiple routes to customers. There's no need for coercive approaches. Thankfully, it doesn't seem like Congress or the FCC is demanding a 'must-carry' rule for Netflix,” he said.

Kenneth Artz (iamkenartz@hotmail.com) writes from Dallas, Texas.

Kenneth Artz

Kenneth Artz (iamkenartz@hotmail.com) is a freelance reporter for The Heartland Institute based in... (read full bio)