Netflix takes stand against Comcast-Time Warner deal

Netflix opposes the Comcast-Time Warner Cable merger, the company said on Monday.

In a letter to shareholders announcing the company’s first quarter earnings, Reed Hastings and David Wells, Netflix’s chief executive and chief financial officers, wrote that they feared that the combination would give Comcast even more power than it already has. They noted that even before the merger, Comcast was able to force Netflix to pay to upgrade the backend data connection between them.

“Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix,” Hastings and Well wrote. “The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers. ”

With its opposition, Netflix immediately jumps to the fore of corporate opposition to the Comcast-Time Warner Cable combination. Prior to its announcement, it and other Silicon Valley companies had declined to comment on the merger and Carl Guardino, who leads a group representing Silicon Valley CEOs, has said he personally favors the deal. To date, much of the opposition to the deal has come from consumer and public interest groups.

But Netflix’s opposition to the merger isn’t surprising. Last month, barely a month after Netflix signed a deal with Comcast to upgrade their interconnections, Hastings wrote a blog entry lamenting Comcast’s ability to charge a “toll” to his and other Internet companies and calling for regulators to intervene.

Netflix’s stance echoes that of consumer groups. Those groups, which recently submitted a petitions signed by some 400,000 citizens opposed to the merger, have worried that the combination would be anti-competitive and potentially give Comcast a dangerous amount of control over what consumers can access on the Internet and on their TVs.

Hastings and Wells also used their letter to lobby AT&T to upgrade its own connection to Netflix’s service. Netflix rates the performance of various broadband providers based on the experience of its users. The Netflix executives noted that Comcast’s service has improved after Netflix’s deal with the company. But AT&T’s U-verse service rated poorly, even compared to supposedly slower DSL providers.

“This reinforces our view that connectivity to the broader Internet is critical to the quality of experience consumers receive,” Hastings and Wells wrote. “It is free and easy for AT&T to interconnect directly with Netflix and quickly improve their customers’ experience, should AT&T so desire.”

Netflix logo courtesy of the company.

Troy Wolverton Troy Wolverton (252 Posts)

Troy writes the Tech Files column as the Personal Technology Columnist at the San Jose Mercury News. He also covers the digital media, mobile and video game industries and writes occasionally about Apple, chips, social networking and other aspects of technology. Previously, Troy covered Apple and the consumer electronics industry. Prior to joining the Mercury News, Troy reported on technology, business and financial issues for TheStreet.com and CNET News.com.