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Comcast’s bid to buy Time Warner is a Netflix opportunity

Cable provider is trying to prove its obligingness to FCC

The Columbian
Published: September 12, 2014, 5:00pm

WASHINGTON — Comcast’s bid for Time Warner Cable may spare Netflix from having to continue paying for smooth display of “House of Cards” and “Orange Is the New Black.”

Regulators weighing the merger asked Comcast about its February agreement with Netflix that requires it to pay for fast delivery over the cable provider’s service. The questions show officials are preparing to help Web video companies that have asked the regulators to prohibit such payments, said Craig Moffett, an analyst with MoffettNathanson in New York.

“I don’t think there’s any question about it — the big winner in the Comcast merger is Netflix,” Moffett said. Regulators can demand conditions as a price for approving Comcast’s $45.2 billion acquisition.

The questions came last month from the Federal Communications Commission, which is separately investigating Internet congestion like the bottleneck that caused Netflix videos to stutter and stop before the agreement with Comcast. Netflix said it was forced to pay, and Comcast says videos stalled because Netflix re-routed its Internet traffic.

Fixing jams where Web traffic flows into Comcast’s system is among a range of possible conditions that may be imposed as the FCC and Justice Department review the deal. The biggest U.S. cable company stands to gain 7 million more video customers and a cable presence in top markets New York and Los Angeles.

Comcast would gain as much as half the U.S. market for broadband, or high-speed Internet service, putting it in position to degrade video traffic or charge Netflix and other online video providers, including Google Inc.’s YouTube and Amazon.com Inc.’s Instant Video, according to critics.

Competitors fear other effects too. Companies and advocacy groups have asked regulators to make sure rival pay-TV providers can obtain Comcast programming, such as “The Biggest Loser” on NBC or reruns of “NCIS” on USA Network.

Preserving competition, which Netflix poses to Comcast’s video business, “is the most acute concern of antitrust law,” said Chris Sagers, a law professor at Cleveland State University. Regulators could prohibit Comcast from charging to mend electronic bottlenecks like those that slowed Netflix videos last Christmas season, he said.

Netflix in one of those inquiries — about new rules for handling Web traffic, or net neutrality regulation — asked the FCC to prohibit cable providers from demanding payment from Web companies that send them traffic.

Washington-based Cogent, which operates Internet networks carrying data between cities and companies, urged the FCC to require that Comcast promptly augment capacity as traffic increases.

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