A Warning Shot Across The Bow
I mentioned a while back that there was going to be a huge face-off between content providers and bandwidth providers (and companies who want do both) at some point in the near future. This may be the inception:Level 3 in essence operates a highway on the Internet that handles traffic to and from individual Web sites. Comcast customers rely on the company’s on- and off-ramps from that highway. With 17 million broadband Internet customers, Comcast is the nation’s largest such service provider.
The scuffle between the two started on Nov. 19, when Level 3 says Comcast demanded a recurring fee to “transmit Internet online movies and other content to Comcast’s customers who request such content.”
Three days later, under pressure from Comcast, “Level 3 agreed to the terms, under protest, in order to ensure customers did not experience any disruptions,” Mr. Stortz said.
Mr. Stortz did not cite Netflix in his statement. But just a week before Comcast’s demand, Level 3 announced a multiyear deal to support Netflix’s rapidly growing streaming service.
A recent study found that at peak times, Netflix represented 20 percent of Internet download traffic in the United States. That makes it a de facto competitor for incumbent distributors like Comcast and Time Warner Cable, which are eager to protect both the subscription television business and the emerging video-on-demand business.
As the Bud Lite commercials (and Eli 9.3) are fond of saying: here we go.
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