Tuesday, November 30, 2010

Comcast's Attack on Netflix Streaming

Light Reading has published an article describing how Comcast is forcing Level 3 to pay to deliver Netflix streaming traffic to Comcast broadband customers. This will raise Netflix's costs for delivering streaming video to Comcast customers.

Netflix streaming is a direct competitor to Comcast's own video broadcast and video on demand services. It is using its position as the broadband service supplier to improve its competitive position. Level 3 is calling this a net neutrality issue.

This will work in Comcast's interest in the short run. However, in the long run it will make "cord cutting" more attractive for its broadband customers. Making Netflix more expensive will make it more attractive for its customers to drop its services and move to over the air broadcast TV supplemented with Internet streaming. This will save most customers $100 per month.

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