Netflix released its quarterly earnings report on Monday, along with the usual letter to shareholders. The company took part of its letter to talk about net neutrality and the proposed merger between Comcast and Time Warner Cable.
CEO Reed Hastings and CFO David Wells wrote:
The Internet faces a long term threat from the largest ISPs driving up profits for themselves and costs for everyone else as detailed in our recent blog post.
If the Comcast and Time Warner Cable merger is approved, the combined company’s footprint will pass over 60 percent of U.S. broadband households, after the proposed divestiture, with most of those homes having Comcast as the only option for truly high-speed broadband (>10Mbps). As DSL fades in favor of cable Internet, Comcast could control high-speed broadband to the majority of American homes. Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix. The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers. For this reason, Netflix opposes this merger.
Comcast issued a statement, saying Netflix’s opposition 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,” writes SVP, Corporate and Digital Communications Jennifer Khoury. “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.”
She then proceeds to run down a list of “facts,” which you can read here.
“Netflix is free to express its opinions,” says Khoury. “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.”
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