Netflix names allies in cable war

In a strong message to Comcast and other foes, the online movie streamer posts a list of the best Internet providers for watching videos.

By Kim Peterson Jan 27, 2011 2:01PM
Credit: (© Paul Sakuma/AP)
Caption: Netflix DVDLooks like Netflix (NFLX) is pulling out the big guns in its brewing battle against cable operators.

The company is sending a message to the Comcasts and Time Warners of the world: If you mess with us, we'll tell your customers about it.

In a letter to shareholders, Netflix chief Reed Hastings said that starting today, he'll post a list of the Internet providers offering the best and most consistent experience for streaming videos. The top one, he says, is Charter Communications (CHTR).

This gets at the heart of some ongoing nastiness between Netflix and a few cable companies -- namely, Comcast (CMCSA). Netflix customers are bandwidth hogs, and some reports say that at peak times, their video streaming ties up 20% of downstream Internet traffic.

By the way, Netflix reported earnings this week, and the following video covers the numbers.

Post continues after video
Cable providers need more resources to support this spike in streaming, and they aren't happy about it. They want Netflix to pay. Comcast, for example, wants to slap a fee on one of Netflix's delivery partners, Level 3 Communications (LVLT), whenever a Netflix customer requests a streaming video on its system.

In his letter, Hastings calls this practice "inappropriate," though he doesn't mention Comcast by name. The ideal setup, he says, is Netflix delivering the streaming video to an Internet provider's front door, and then the provider takes it from there to its customers. Each side pays their own transport costs.

"Their customers already pay them to deliver the bits on their network, and requiring us to pay even though we deliver the bits to their network is an inappropriate reflection of their last mile exclusive control of their residential customers," he adds.

And just to tweak things a little more, Hastings has posted a list of the best Netflix streamers.

The implication is that cable companies that are good partners with Netflix and that deliver an optimal streaming experience go to the top of the list. That's a great endorsement for Netflix customers looking for an Internet provider -- or those who are unhappy with their current ones.

And the bad partners? Well, they get served up a little humiliation.

Posting the names of "good" Internet providers is a small gesture, but it's one that sends a strong message to Comcast and others: Netflix is ready to play hardball.

Update: The list is up and you can see the chart here. Charter is indeed the top performer, but, surprisingly, Comcast comes in second place. Time Warner Cable (TWC) and Cox Communications are tied for third.

The worst performers? Clearwire (CLWR), Frontier (FTR) and CenturyTel. For now, at least. Netflix says it will update this list monthly.

Jan 28, 2011 1:41AM
To Who It May Concern - I have disabled my Adobe Flash player because of MSN's bad behavior of playing Flash files and turning on the volume high.  You have no right to push this sh1t on every page just so you can generate advertising dollars.    
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