Comcast Blasts Netflix Over Opposition to Time Warner Cable Merger

Comcast Time Warner Cable

Netflix’s criticism is “based on inaccurate claims and arguments,” Comcast says

Comcast has come out swinging at Netflix, after the video streaming company opposed Comcast’s bid to merge with Time Warner Cable.

Comcast’s senior vice president of corporate & digital communications, Jennifer Khoury fired back at Netflix in a statement Monday, saying the company’s opposition is “based on inaccurate claims and arguments.”

Netflix CEO Reed Hastings and chief financial officer David Wells criticized the Comcast-Time Warner Cable merger in a letter to shareholders, saying it would lead to a single company holding too much control over the broadband internet market, and lead to an anti-competitive situation.

Hastings added in a call with analysts that the merger could also endanger net neutrality.

Also read: Senator Al Franken to Netflix CEO: What’s Your Take on the Comcast-Time Warner Deal?

“In addition, we are lobbying for the idea, that we think is natural, that interconnection is part of net neutrality,” Hastings said.

But in her statement, Khoury said that the merger would actually lead to increased net neutrality protections.

“Netflix’s opposition to our Time Warner Cable transaction is based on inaccurate claims and arguments,” Khoury said. “There has been no company that has had a stronger commitment to openness of the Internet than Comcast and we are the only ISP in the country that is currently legally bound by the FCC’s vacated net neutrality rules. In fact, one of the many benefits of our proposed transaction with Time Warner Cable will be the extension of net neutrality protections to millions of additional Americans.”

Also read: Consumer Group Slams Comcast, Time-Warner Deal at New Senate Hearing (Updated)

Read Comcast’s full response below.

“Netflix’s opposition to our Time Warner Cable transaction is based on inaccurate claims and arguments.  There has been no company that has had a stronger commitment to openness of the Internet than Comcast and we are the only ISP in the country that is currently legally bound by the FCC’s vacated net neutrality rules.  In fact, one of the many benefits of our proposed transaction with Time Warner Cable will be the extension of Net Neutrality protections to millions of additional Americans. Here are the facts:

Internet interconnection has nothing to do with net neutrality; it’s all about Netflix wanting to unfairly shift its costs from its customers to all Internet customers, regardless of whether they subscribe to Netflix or not.
There is nothing unprecedented about our agreement with Netflix.  It’s very similar to agreements that companies like Akamai, Yahoo, Limelight, and Google have with companies like Verizon, AT&T, Level 3, Sprint, and Comcast.  Comcast alone has thousands of these transit relationships.

In fact, Netflix approached us for this direct connection between Netflix and Comcast, cutting out the wholesalers with whom Netflix had traditionally contracted and paid for transit.  This arrangement was thus about Netflix exercising its market power to extract a more favorable arrangement directly from Comcast than what Netflix had been paying for through third party providers.
If Netflix did not like the terms of our agreement, or if they do not like the terms Comcast provides at any time in the future, Netflix can work with any of the multiplicity of partners that connect with Comcast.  There was and is no need for Netflix or any other Internet content provider to work directly with us or any other specific ISP.

Transit is a highly competitive marketplace and Netflix and other Internet content providers have many choices.  In the last 15 years, this transit market has been so competitive that pricing has declined by over 99%.
Netflix’s opposition to our transaction with Time Warner Cable is also unfounded because the issues raised by Netflix apply to the industry as a whole, which is why the FCC has said that it will look at interconnection issues.  Netflix’s arguments are not transaction specific.

In any event, according to the latest FCC data, 97 percent of U.S. homes have access to three or more fixed or mobile providers who offer broadband services consistent with the FCC definition of broadband, a speed that Netflix has said is sufficient to deliver Netflix streaming video services to the consumer.

Netflix is free to express its opinions.  But they should be factually based.  And Netflix should be transparent that its opinion is not about protecting the consumer or about net neutrality.  Rather, it’s about improving Netflix’s business model by shifting costs that it has always borne to all users of the Internet and not just to Netflix customers.”