How is this for bad timing? Just as Comcast (s CSCMA) is gearing up to finalize a closely scrutinized merger with NBC Universal, (s GE) it’s dragged into yet another net neutrality debate, this time focusing on allegations it tried to impose extra tolls on Netflix (s NFLX) video traffic.
Level 3 (s LVLT) is alleging that Comcast is trying to do away with the open Internet by demanding Level 3 pay it for transit. Comcast, on the other hand, is taking the stance that this is just business as usual. Even without taking sides, one has to wonder: Why is Comcast always the one that’s getting in trouble?
The answer, in short: Comcast has become the quintessential broadband bully — an image that is part outside perception, part self-fulfilling prophecy. Here’s the list of missteps and allegations that shaped Comcast’s image:
Sabotaging P2P. Comcast’s first major brush with net neutrality advocates happened when the company decided to block its customers’ P2P file transfers in the summer of 2007. The company eventually changed its network management practices under pressure from the FCC, which nonetheless proceeded to impose restrictions on Comcast’s handling of P2P traffic. The proceedings included memorable moments like an FCC hearing that was packed with people paid by Comcast to “save seats.”
Killing net neutrality and neutering the FCC. Comcast went to court to fight the FCC order even though it had already implemented much of it before the commission had issued its demands — and won. The court ruling effectively crippled the FCC by restricting its authority over the Internet, and efforts to implement strong net neutrality protection in the U.S. haven’t been successful since.
Spying on its customers. It may have been just one of those ideas that would never see the light of day, but Comcast’s plans to use cameras to figure out who was watching TV at any given time didn’t exactly help the company’s image.
Capping customers’ bandwidth. Comcast was one of the first ISPs to institute a bandwidth cap in the summer of 2008, threatening customers who repeatedly use more than 250GB a month with account terminations. The step was followed by a public uproar. Guess what happened when Charter (chtr) introduced even lower caps half a year later? That’s right: Nothing.
Blocking Hulu. Wait, did they really do that? No, they didn’t. Hulu itself recently did, acting on behalf of Fox, (s NWS) as part of its retransmission fee dispute with Cablevision. (s CV) In fact, the incident, which briefly prevented Cablevision customers from accessing videos on Hulu, didn’t have anything to do with Comcast. Except maybe for the fact that a merged Comcast-NBC would be able to have Hulu institute similar measures at any time. Which kind of makes you wonder: Was Fox really just out to get more money from Cablevision, or did it try to influence the regulatory merger review of one of its biggest competitors?
Peddling cable modems. Lost in the uproar about Level 3’s allegations was another FCC complaint filed against Comcast yesterday: Cable modem maker Zoom (s ZOOM) is alleging that Comcast is trying to force its customers to lease or buy Comcast-provided cable modems by shutting out competing products though unnecessary tests and standards. From Zoom’s press release:
“These new standards, among other things, address a modem’s weight, labeling, and packaging as well as its physical appearance following the application of various substances, such as waxes. They also require a cable modem to suffer no degradation in performance at temperatures far in excess of those generally found in the United States and well above the requirement for electronics equipment such as an iPad or a personal computer.”
Merging with NBC. No one really doubts at this point that the merger of Comcast and NBC Universal will go through. Still up in the air, though, is the question of whether Comcast will have to agree to any stipulations regarding its online offerings. These could range from requirements to license NBC content to competitors to a forced divestiture from Hulu, of which NBC currently owns 32 percent.
The current conflict with Level 3 is only adding to the pressure, especially since Level 3 is busy using this to pit Comcast’s Xfinity online offering against Netflix, stating that “the fundamental issue is whether Comcast… has the right to unilaterally set a ‘price’ for access that effectively discriminates against competitors of Comcast’s cable and Xfinity content.”
It’s unclear what exactly the fall-out of the Level 3 dispute will look like — but it’s becoming more and more clear that Comcast’s ability to evoke strong emotions and influence consumers and regulators to action is phenomenal.
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