FCC Looks at Comcast, Verizon Deals
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The FCC has begun looking into Comcast and Verizon’s deals with Netflix as part of an overall inquiry into so-called “interconnection agreements” — pacts that content companies make to connect their traffic with Internet providers and deliver it the last mile to the consumer.

Netflix has complained that Comcast and Verizon are demanding payments to upgrade its signal, a reflection of the increasing demand for Internet video, while other ISPs have not.

FCC chairman Tom Wheeler said on Friday that their study is separate yet related to the agency’s effort to rewrite net neutrality rules, as those have to do with whether an Internet provider can block traffic or give preferential delivery to certain types of content.

“To be clear, what we are doing right now is collecting information [on interconnection], not regulating,” Wheeler said. “We are looking under the hood. Consumers want transparency. They want answers. And so do I.”

He said that the FCC has received copies of the agreements Netflix made with Comcast and Verizon. Those deals have been the source of acrimony between the streaming service and the ISPs.

After Netflix made a deal with Comcast in February to ensure quality delivery of its video content to customers, Netflix CEO Reed Hastings complained that ISPs were “extracting a toll because they can,” refusing make way for Netflix traffic on their pipes and then demanding payment from Netflix to deliver video at a higher quality. Netflix also made an interconnection deal with Verizon, and the streaming service even started sending subscribers messages blaming the ISP for poor signals. They removed them after Verizon threatened legal action.

Comcast and Verizon have complained that Hastings is misleading consumers, and the Netflix is trying to force the cost of ever-increasing traffic demands from its video content onto all of their customers, even those who are not Netflix subscribers.

Wheeler said that the situation warranted FCC study.

“Consumers pay their ISP and pay content providers like Hulu, Netflix and Amazon,” Wheeler said. “Then when they don’t get good service they wonder what is going on. I have experienced these problems myself and know how exasperating it can be.”

He cited one email he received by a consumer that said, “Netflix verses Verizon: Is Verizon abusing Net Neutrality and causing Netflix picture to be degraded by ‘throttling’ transmission speeds? Who is at fault here? The consumer is the one suffering? What can you do?”

Wheeler said the FCC would be looking at a wide range of interconnection agreements from content companies and Internet providers. He mentioned YouTube in a press conference with reporters. “We are making inquiries across the board,” he said.

Comcast’s Sena Fitzmaurice said that the company welcomes “the Chairman’s attention to these important issues in the Internet ecosystem.”

“Internet traffic exchange on the backbone is part of ensuring that bits flow freely and efficiently and all actors across the system have a shared responsibility to preserve the smooth functioning and highly competitive backbone interconnection market,” she said in a statement.

Netflix spokesman Jonathan Friedland said, “We welcome the FCC’s efforts to bring more transparency in this area. Americans deserve to get the speed and quality of Internet access they pay for.”

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