Level 3

With demands on Level 3, Comcast ups its fight with Netflix

November 30, 2010: 1:48 AM ET

The battle between the video giants -- one cable, one streaming -- moves from the screen to the fiber.

In a press release today, Level 3 laid out the issue at hand.  Comcast (CMCSK) made Level 3 "an offer it couldn't refuse." Either pay up or Comcast would block its services.

"On November 19, 2010, Comcast informed Level 3 that, for the first time, it will demand a recurring fee from Level 3 to transmit Internet online movies and other content to Comcast's customers who request such content. By taking this action, Comcast is effectively putting up a toll booth at the borders of its broadband Internet access network, enabling it to unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity delivered content. 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.

This sets a scary precedent.  If Comcast can charge an extra fee to Level 3 for hosting Netflix (NFLX)  content, it could (and probably will at some point) charge Google (GOOG) to stream YouTube movies or Apple (AAPL) to broadcast iTunes content.  Because Comcast owns the last mile, they hold the keys.

What does this mean for consumers? More

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