Consumers Union asks regulators to scrutinize Comcast-Netflix deal

The advocacy group Consumers Union is urging federal regulators to scrutinize the deal struck between cable giant Comcast Corp. and the Internet streaming service Netflix.

Netflix agreed to pay to directly connect to Comcast's network to improve the video quality of movies and TV shows streamed to subscribers, after many complained about deteriorating quality.

Consumers Union, which publishes Consumer Reports magazine, called on Federal Communications Commission Chairman Tom Wheeler and U.S. Atty. Gen. Eric Holder to investigate whether Comcast is abiding by its agreement to treat all Internet traffic equally. Comcast made the promise to win federal government approval of its 2011 purchase of a controlling interest of media conglomerate NBCUniversal.

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"We are concerned that many Comcast customers who experienced problems with Netflix sought faster and more expensive services from Comcast to alleviate the problems," wrote Consumers Union attorney Delara Derakhshani. "Comcast failed to disclose what was transpiring."

The consumer group also asked the Department of Justice to examine claims of deteriorating streaming quality for Netflix customers. The streaming service's monthly report of streaming speeds showed a 27% decline among Comcast subscribers from October to January.

The slowdown is a matter of dispute. Some people familiar with the matter blame the performance lag on congested links between Comcast and intermediaries such as Cogent. Netflix's arrangement with Comcast would cut out third parties that until now have been carrying its video traffic.

Regulators are already planning to look at Comcast's operations as they review the company's planned $45.2-billion acquisition of Time Warner Cable, which would give Comcast millions of additional subscribers in such markets as Los Angeles and New York. 

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"We urge the department to investigate whether these matters violate its consent decree with Comcast and take appropriate action to ensure that consumers don't wind up bearing an unfair burden," Derakhshani said.

Netflix and Comcast have portrayed their agreement as a run-of-the-mill business arrangement, similar to deals that already exist between the high-speed Internet service provider and companies delivering large volumes of content to its servers -- such as Google Inc.'s YouTube and Yahoo. 

Neither Netflix nor Comcast could be reached for comment.


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