FCC to Investigate Comcast, Level 3 Spat over Broadband Traffic Fees

Level 3's spat with Comcast over fees for bandwidth traffic will be looked into by the Federal Communications Commission.

Level 3 Communications has accused U.S. cable provider Comcast Communications of imposing an unfair fee on bandwidth traffic. As a provider of fiber-based communications services, Level 3 helps stream Netflix's television shows and movies to consumers. Now U.S. regulators are getting involved.

"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," John Ryan, assistant chief legal officer for Legal 3, wrote in a Nov. 30 statement. "By taking this action, Comcast is effectively putting up a toll booth at the borders of its broadband Internet access network."

Level 3 claims it agreed to Comcast's demands "under protest," but nonetheless decided to take the issue public. "Comcast is preventing competing content from ever being delivered to Comcast's subscribers at all, unless Comcast's unilaterally determined toll is paid," Ryan added. "With this action, Comcast demonstrates the risk of a -closed' Internet, where a retail broadband Internet access provider decides whether and how their subscribers interact with content."

For its part, Comcast is framing the dispute as money-related. "The bottom line is that Level 3 is trying to be opportunistic and change the regime that has long been in place for this type of commercial arrangement," a Comcast spokesperson told The Wall Street Journal Nov. 30.

In any case, the Federal Communications Commission is investigating the matter. "We're looking into it," FCC chairman Julius Genachowski said during a Nov. 30 press conference.

Comcast has been previously faced with net-neutrality violations. In August 2008, the FCC ordered the cable provider to stop secretly degrading network traffic. It further asked the provider to disclose to the agency the full extent of its traffic practices and keep the public informed of its future network-management plans. However, the U.S. Court of Appeals for the District of Columbia Circuit later threw out the FCC's decision, in the process derailing many of the agency's net-neutrality plans.

The FCC has scheduled a Dec. 21 meeting over net neutrality, with speculation that the agency intends to vote on whether it can regulate Internet service providers who attempt to restrict users' access to certain Websites and services. "The signals out there seem to be [that] they are, in fact, contemplating a vote in December," Jeffrey Silva, an analyst with Medley Global Advisors, told Reuters Nov. 24. "The situation's very fluid at the present time, and I think they're carefully considering the message they've received from Capitol Hill and trying to figure out their next step."

A Congressional bill aiming to regulate Internet providers collapsed in September, ahead of the midterm elections. That legislation lacked support from Republicans, said Sen. Harry Waxman, D-Calif., chairman of the House Energy and Commerce Committee, but would have curbed the FCC's ability to enforce guidelines on Internet providers after two years.