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Netflix to Al Franken: Comcast takeover would harm consumers

Brandon Griggs, CNN
STORY HIGHLIGHTS
  • Netflix sent U.S. Sen. Al Franken a letter opposing Comcast's takeover of Time Warner Cable
  • Netflix fears merger would give Comcast-TWC leverage to extract higher fees
  • Comcast accuses Netflix of distorting the facts
  • Federal regulators must decide whether the proposed deal can go through

(CNN) -- You probably won't see executives from Comcast and Netflix cozying up at some corporate event anytime soon.

In its second such complaint this week, Netflix told U.S. Sen. Al Franken that Comcast's takeover of Time Warner Cable would give the merged cable behemoth the leverage to extract higher fees from content providers, costs that would ultimately be passed on to consumers.

"The proposed merger will result in online video content providers paying higher prices for access to Comcast customers or delivering poorer service to customers who depend on Comcast for broadband access," wrote Netflix Vice President Christopher Libertelli in a letter to Franken.

"Ultimately, competition and consumers will suffer," he continued in the letter, made public by Franken's office Thursday. "That is why Netflix opposes the merger."

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Netflix's letter to Franken came on the heels of its Monday letter to shareholders, in which CEO Reed Hastings and CFO David Wells argued a merged Comcast-TWC could "charge arbitrary interconnection tolls for access to their customers."

Of course, Netflix is no impartial observer in this deal. The company pays Comcast for access to its vast network of U.S. cable subscribers and does not want to absorb any fee hikes imposed by a newly dominant Comcast-TWC.

Comcast fired back this week, accusing Netflix of distorting the facts.

"Netflix should be transparent that its opinion is not about protecting the consumer or about Net Neutrality," said Comcast senior Vice President Jennifer Khoury in a rebuttal posted online. "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 dispute comes as the Federal Communications Commission is proposing new rules that would allow Internet providers such as Comcast to create a "fast lane" for certain websites and services. The rules have drawn fire from advocates of net neutrality, the concept that access to the Internet should be equal for everyone.

With Franken, Netflix may be preaching to the choir. The senator from Minnesota has been a vocal critic of the Comcast takeover.

"The danger in allowing Comcast to accrue even more power is not purely hypothetical. The company is already using its dominant position to dictate terms to content providers seeking to reach its 20 million customers," Franken wrote in an opinion piece published on CNN.com earlier this month.

Franken has no real say in whether the $45 billion merger will be approved, however. That power rests with the Department of Justice and the FCC, whose regulators must decide whether the deal violates antitrust laws.

A combined Comcast-Time Warner Cable would bring cable or Internet service to about 30% of American subscribers and serve 19 of the country's 20 largest metropolitan regions. That would bolster Comcast's current status as the nation's largest TV, Internet and home phone provider.

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