Comcast, Level 3 Trade Barbs Over Net Fees

Level 3 and Comcast are in a dispute over the transmission of video on the Internet, and the outcome could have large implications for companies that transmit video over broadband networks.

The rift between the two opened on Nov. 19, according to a statement from Thomas Stortz, chief legal officer of Level 3. Comcast told Level 3 that it would demand a fee for Level 3 to transmit video to Comcast's customers. Level 3 says it is using the fee as a method of short-changing content providers who might compete with Comcast's cable offerings.

This action by Comcast threatens the open Internet and is a clear abuse of the dominant control that Comcast exerts in broadband access markets as the nation's largest cable provider, Stortz said.

Not so, says Comcast, which maintains it is simply trying to balance network traffic. Comcast says Level 3 was offered the same deal as its other customers, and that by pushing the video traffic onto Comcast - about five times as much as Comcast sends to Level 3's network, the company claims - the costs of delivering the video content are unfairly shifted to Comcast and its customers.

We are happy to maintain a balanced, no-cost traffic exchange with Level 3. However, when one provider exploits this type of relationship by pushing the burden of massive traffic growth onto the other provider and its customers, we believe this is not fair, said Joe Waz, SVP, External Affairs and Public Policy Counsel, on Comcast's web site.

If Comcast - or by extension any other broadband provider - begins charging more for higher-bandwidth content, then any company providing video over the Internet would likely end up paying more. Companies such as Netflix, which transmits a large part of its video offerings over the Internet, would probably end up passing that on to consumers. The same would be true of a host of video-sharing sites such a YouTube, Hulu and Metacafe.

That would put a dent in the video-over-Internet market growth. But transmitting content over broadband networks costs money, and network providers say they need a way to cover those costs.

Comcast and Level 3 are meeting later this week to resolve their dispute.