Netflix came out against the proposed Comcast-Time Warner Cable merger Monday, warning that a combined company would use its power to charge websites tolls to reach their customers.
Comcast — the country's largest Internet provider — is already big enough to charge websites "unprecedented" fees, and a combined Comcast-TWC would become even more "anti-competitive," Netflix said in its earnings report Monday,
"The Internet faces a long-term threat from the largest [Internet service providers] driving up profits for themselves and costs for everyone else," Netflix said in a statement.
Although this is the first time Netflix commented on the merger, the company has been very critical of Comcast in the past. Last month, Netflix CEO Reed Hastings blasted Comcast over the agreement Netflix entered into with the Internet provider in February that requires Netflix to pay a fee to ensure smooth streaming for Comcast subscribers.
This kind of deal, known as an interconnection deal, was not part of the federal government's recently overturned net-neutrality rules, which required all Internet providers to treat Internet traffic equally. But Netflix recently urged the Federal Communications Commission to expand the rules to protect against such practices.
"The essence of net neutrality is that [Internet service providers] such as AT&T and Comcast don't restrict, influence, or otherwise meddle with the choices consumers make," Hastings said in a March blog post. "The traditional form of net neutrality which was recently overturned by a Verizon lawsuit is important, but insufficient."
Comcast called Netflix's arguments for its opposition "inaccurate," saying that interconnection deals have "nothing to do with net neutrality" in a statement Monday. The company maintained that the merger will be good for net neutrality because it is the only ISP still bound by the open-Internet rules, due to conditions set when it acquired NBC Universal in 2009. Those rules would extend to Time Warner customers if the merger is approved.
"Netflix should be transparent that its opinion is not about protecting the consumer or about net neutrality," Jennifer Khoury, Comcast's senior vice president of corporate and digital communications, wrote Monday. "Rather, it's about improving Netflix's business model by shifting costs that it has always borne to all users of the Internet and not just to Netflix customers."
The proposed merger has attracted a great deal of regulatory scrutiny and is currently under review by the FCC and the Justice Department.