Netflix, Comcast duel over merger
Netflix has revealed that it added 2.25 million US subscribers during the first quarter of 2014, ending the period with over 48 million global members, topping $1 billion in quarterly streaming revenue. In announcing its Q1 figures, it took the opportunity to voice its opposition to the proposed merger of cable MSOs Comcast and Time Warner Cable.
The 2.25 million net members took the total to 35.7 million members. It had higher domestic net additions than in Q1 2013, growing international success, and recorded a big hit with Season 2 of House of Cards.
Netflix notes that if the Comcast and Time Warner Cable merger is approved, the combined company’s footprint will pass over 60 per cent of US broadband households, after the proposed divestiture, with most of those homes having Comcast as the only option for truly high-speed broadband (>10Mbps). “As DSL fades in favour of cable Internet, Comcast could control high-speed broadband to the majority of American homes. Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix. The combined company would possess even more anticompetitive leverage to charge arbitrary interconnection tolls for access to their customers. For this reason, Netflix opposes this merger,” it stated.
Comcast was quick to criticise Netflix’s opposition to the deal, suggesting it was based on “inaccurate claims and arguments”. Jennifer Khoury, Comcast’s SVP of corporate and digital communications, said that there has been no company that has had a stronger commitment to openness of the Internet than Comcast and it was the only ISP in the country that is currently legally bound by the FCC’s vacated net neutrality rules. “In fact, one of the many benefits of our proposed transaction with Time Warner Cable will be the extension of Net Neutrality protections to millions of additional Americans,” she added.
“Netflix is free to express its opinions. But they should be factually based,” Khoury argued. “And Netflix should be transparent that its opinion is not about protecting the consumer or about net neutrality. 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.”