Netflix joins opponents of Comcast-TWC merger

 

Netflix on Monday came out against the proposed merger of Comcast and Time Warner Cable, arguing in a letter to shareholders that the deal would give the companies too much market power.

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"If the Comcast and Time Warner Cable merger is approved, the combined company’s footprint will pass over 60 percent of U.S. broadband households ... with most of those homes having Comcast as the only option for truly high-speed broadband," Netflix CEO Reed Hastings and CFO David Wells wrote.

"As DSL fades in favor of cable Internet, Comcast could control high-speed broadband to the majority of American homes."

Last week, Sen. Al Franken (D-Minn.) — a vocal opponent of the proposed merger — asked Netflix to weigh in on the deal. The company said it would be responding to Franken's request, and federal filings show that the company has requested access to information about the merger.

Netflix's move to oppose the merger comes after the video streaming company reached a deal with Comcast earlier this year to boost streaming speeds for Netflix users who get Internet through Comcast.

In a blog post, Hastings called that deal, which allowed Netflix to connect directly to Comcast servers rather than through a third party, an "arbitrary tax," and slammed Comcast.

"Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix," the company said in its shareholder letter.

"The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers."

The company also announced that it would be raising its prices by one or two dollars for new customers. Existing U.S. customers will continue to pay $7.99 per month "for a generous time period."

"These changes will enable us to acquire more content and deliver an even better streaming experience," the company wrote.

According to a company spokesperson, the "main motivation" behind the price increase "is to provide more great things to watch, but content delivery costs are part of the costs we have to pay."

Netflix also used its letter to investors to encourage AT&T to improve the streaming experience for Netflix users.

Netflix posts monthly rankings of Internet providers' streaming experiences. According to last month's rankings, AT&T's fiber-based service was ranked 12th out of 16.

The letter pointed to customer comments on a recent AT&T blog post, which criticized Netflix for complaining about the interconnection deal it reached with Comcast.

"The 249 customer comments on AT&T’s anti-Netflix blog post indicate that AT&T customers expect a good quality Netflix experience given how much they pay AT&T for their Internet service," 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."