Is Comcast violating net-neutrality rules?

May 16, 2012: 4:00 PM ET

Even if it turns out that Comcast's Xfinity for Xbox video-on-demand service isn't running afoul of the FCC's rules for treating Internet traffic equally, the result is the same for consumers and competitors: Comcast's service has the edge.

FORTUNE -- It's up to the FCC to decide whether Comcast (CMSCA) is violating the letter of net-neutrality rules in the way it handles its video-on-demand traffic through its Xbox app, be there seems to be little doubt that the country's biggest cable-TV provider is violating the spirit of those rules.

Until Tuesday, Comcast had stayed mum as complaints started to pile up, most notably one from Netflix (NFLX) CEO Reed Hastings a month ago. He noted in a Facebook post that he watched movies through his Xbox 360 using four different apps: Netflix, HBO Go (TWX), Xfinity and Hulu. Only in the case of Comcast's Xfinity, he said, was the stream not counted against his Comcast data cap. On Tuesday, Bryan Berg posted a description of what he says was an experiment demonstrating that Comcast is prioritizing its own traffic for the service. Berg, founder and chief technical officer of Mixed Media Labs, is described as an "infrastructure expert" by The Verge. If Berg's analysis is accurate, writes the The Verge's T.C. Sottek, it would mark "a bold deviation from the spirit of the FCC's net neutrality principles."

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Comcast says it isn't true. Finally weighing in on the controversy, the firm posted an explanation on Tuesday noting that it runs its Xfinity for Xbox service on its own, private Internet protocol network. That traffic doesn't count against bandwidth caps, it says, because its network is "above and beyond and distinct from" the bandwidth available to customers via their regular Internet connection. In other words, it's like Comcast's cable-TV service, but it uses Internet technology to distribute video, but not over the Internet itself."It's still our traditional cable service," and so it doesn't fall under the FCC's Open Internet rules, Comcast says, noting that its Internet-based Xfinity services, such as its Ipad app and Web-video services do count toward the company's 250-gigabyte bandwidth cap. Comcast, apparently alluding to Berg's post, also said it doesn't prioritize traffic.

This amounts to a "non-denial denial," writes Ryan Lawler of TechCrunch. Comcast's response will "provide little solace to online video publishers and distributors who are streamed over the broader Internet and do actually count against Comcast's caps," Lawler writes.

After all, the rules (and, as Lawler notes, the provisions of the federal government's approval of the Comcast-NBC Universal merger) are meant to prevent Internet service providers from favoring traffic. Even if Comcast is in technical compliance (which is far from clear), the result for consumers is that some video-watching will count against their bandwidth caps and other video-watching won't.

Taking a more philosophical view of the situation, commenter Jeff Durso wrote under the TechCrunch item: "If you're hitting the 250gb cap, you may want to turn off the Xbox and spend some time outside."

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