Blog Post

Netflix CEO calls out Comcast on net neutrality

When most Comcast subscribers complain, it’s a blip. When the CEO of Netflix (s NFLX) vents to his 120,000 subscribers on Facebook, it’s a salvo. Reed Hastings doesn’t agree with Comcast’s (s CMCSK) approach to net neutrality and caps — and he wants everyone to know it.

His beef? Watch Netflix, Hulu (s DIS) (s NWS) or HBO Go (S TWX) on Xbox and it counts against Comcast’s broadband cap for consumers. Use Comcast’s own Xfinity app and it doesn’t. Translation: Anyone worried about hitting the cap will watch what they can on Xfinity, giving it an advantage over the other services like Netflix or even a service it partially owns (but has no say over), Hulu.

From his Facebook post:

Comcast no longer following net neutrality principles.

Comcast should apply caps equally, or not at all.

I spent the weekend enjoying four good internet video apps on my Xbox: Netflix, HBO GO, Xfinity, and Hulu.

When I watch video on my Xbox from three of these four apps, it counts against my Comcast internet cap. When I watch through Comcast’s Xfinity app, however, it does not count against my Comcast internet cap.

For example, if I watch last night’s SNL episode on my Xbox through the Hulu app, it eats up about one gigabyte of my cap, but if I watch that same episode through the Xfinity Xbox app, it doesn’t use up my cap at all.

The same device, the same IP address, the same wifi, the same internet connection, but totally different cap treatment.

In what way is this neutral?

It’s not the first time Hastings has turned to Facebook to raise a question about Comcast. Late last month, he lobbied for the nation’s largest cable operator to allow access to HBO Go on the Xbox. Then, he raised the cap issue a tad more gently:

Once I get HBO GO on my Xbox, then it will be strange that streaming Game of Thrones from the HBO GO app on my Xbox will count against my Comcast internet cap, but when I watch those same Game of Thrones streams through the Comcast app on Xbox, over the same wifi connection to my Xbox, then it will not count against my cap. Hmmm…

No “hmmm” about it this time.

Netflix recently formed Flixpac, its own political action committee. What can it do about net neutrality? My colleague Stacey Higgenbotham explained:

In conversations with insiders in DC and at Netflix, the video streaming service’s agenda has become clear. Get rid of the Video Protection Privacy Act and help push an agenda to keeps content flowing across the web. Issues such as Comcast not counting video streamed via the Xbox against its cap and the Verizon deal to buy spectrum from the cable companies all have implications for Netflix’s business model. In the first example it brings up the issues of creating what essentially becomes a private version of the Internet to sling Comcast video on demand content around in a manner that won’t penalize the consumer for streaming.

We haven’t heard the last from Hastings on this subject. He’ll use any and every means to get the point across.

Update: I should have included the reason Comcast sees a difference between the video it delivers through Xfinity and video that comes from other services. As Stacey H. explains here, Comcast manages Xfinity delivery to the Xbox through its own IP network rather than across the public Internet. Comcast the ISP isn’t counting usage managed through its private network against the 250GB broadband cap. Comcast has yet to reply to my request for comment.

(via Jason Hirshhorn)


23 Responses to “Netflix CEO calls out Comcast on net neutrality”

  1. I’m shocked that any wired Internet provider is putting a cap on customers in the first place. Didn’t metering go the way of the Do-Do when everyone didn’t have to use AOL anymore? But hey, we’re all too busy trying to keep up with our bills and taxes to do anything about it. Just pay the few extra bucks and stay under the cap. Problem solved, America! :D

  2. Paul Sweeting

    What this dispute exposes, like the dispute between Comcast and Level 3 (also involving Netflix traffic) is the difficulty of asking the FCC tackling competitive issues using the tools of telecommunications regulation. These issues are really best addressed through antitrust laws, by the FTC and Justice Department.

  3. Sean Hunter

    How is Comcast’s delivery through the Xbox app different from a CDN (e.g. Limelight, Akamai, Level3)? Don’t they pay the ISP to hook directly into the ISP’s private network? I have to assume that’s how HBO controls what ISP’s have access to their content as well.

    If you look at the technical details and Comcast’s public reasoning, there’s a 99% chance it’d fall apart in court. Why hasn’t GigaOm understood this yet?! Read about the Level3 “peering” dispute on NANOG then come back and make public comments that don’t challenge Comcast’s position. :/

    ^– That’s me. Being disappointed in GigaOm.

  4. Dominic Jones

    Rather than compete on price, quality or utility, Comcast is using caps as a way to discourage broadband customers from using non-Comcast video products. Today it’s video, but what’s tomorrow? Will they give preference to their own news apps, social network, software as a service products…? It’s a slippery slope from here.

      • Will Hild

        Dominic isn’t that just another form of competition. If consumers don’t like the cap of how Comcast counts it they can go with another service, or they could if current FCC regulations didn’t substantially limit the number of competitors in each market. This seems to me like another corporate fat cat CEO looking to congress to use the force of law to solve his problems instead of fixing it themselves by competing in the marketplace.

  5. The Comcast app delivers the content locally. Therefor it doesn’t cost Comcast anywhere near as much to deliver the content. I bet if Netflix was paying to use their pipes, it wouldn’t be a problem.

    Don’t get me wrong here. I hate Comcast. However I don’t see that they are doing anything wrong here.

      • That’s a ridiculous statement. Just “easily” build their own pipes. And Comcast’s “pipes” were built with taxpayer money. Support for a system like this will lead to Comcast as your only source for content. And how is that good?

  6. Jay Cuthrell

    If you look back upon the impact of AOL during the dial-up era upon traditional Class 5 switching platforms within service provider environments (telco) in various parts of the US and the eventual prevalence of broadband which begat OTT plays… well, here we are.

    • Paul Szerlip

      I’m not sure you fully understood the point of his statement. It isn’t about the *amount* of data the Comcast app consumes. If the Comcast app consumed a whopping 50x the Netflix app, it still wouldn’t count against your cap.

      In essence, they’re using their broad content deals, and ownership of the pipelines to wedge out services like Netflix, or any competitor for that matter (i.e. monopoly power over content on the internet). I have a hard time understanding how that isn’t a problem for everyone.

  7. Brett Glass

    Looks like Whitacre was prophetic. Local streaming doesn’t use expensive Internet backbone capacity, while Netflix does. So, it’s perfectly reasonable for it to be uncapped. But Netflix wants to use ISPs’ pipes for free.

    • Dominic Jones

      Um, I’m paying my ISP to deliver Netflix, Hulu and other content. In fact, I took a more expensive plan with higher speeds and a higher cap. They’re making a fortune on me. If they make Netflix also pay, then I want a discount from my ISP.

    • MagicMiguel

      It doesn’t matter. Not all sites require the same amount of bandwidth. That’s the way the internet works. When you start deciding which sites are allowed to use bandwidth and which are not, you’re in violation of net neutrality. If you don’t like the way the internet works, get out of the ISP business.

      • Garrett

        Actually, ISPs currently *do* treat different services differently, as part of their OM strategy. If you don’t like the way reality is, get out of the commenting business.