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Level 3 wants limits on Comcast/NBC merger

Tensions between backbone Internet operator Level 3 and cable giant Comcast don’t see to be easing: in a letter to the Federal Communications Commission, Level 3 has recommended that U.S. antitrust regulators place conditions and restrictions on the pending merger between Comcast and NBC Universal, so that the combined company can’t abuse its control over subscribers to unfairly squeeze out competitors. Level 3 wants regulators to require Comcast interconnect with backbone Internet operators on non-discriminatory and reasonable terms.

“Absent governmental restrictions, Comcast and other residential broadband internet service providers have the power to leverage their relationships with broadband consumers to act in an anticompetitive manner,” Level 3 wrote in its letter.

Level 3 and Comcast have been at loggerheads ever since Level 3 inked at deal to serve as a delivery network for streaming video from Netflix. At that point, Comcast claimed the amount of traffic it accepted from Level 3 jumped to about five times the amount of data it sent to Level 3, making their “peering” relationship very one-sided. Comcast demanded ongoing “access fees” from Level 3, saying the terms of the fees were “no different” from fees it charges to other content delivery networks that send data to Comcast. Level 3 maintains that no other local access providers charge Level 3 those kinds of fees, and the fees are all about protecting Comcast’s own Xfinity and online video offering by charging a “price” for competitors to reach Comcast customers.

The merger between Comcast and NBC Universal has been underway for over a year. Comcast has been hopeful the process can be completed by the end of 2010.

Level 3 admits its dispute with Comcast is mainly about the Internet, but notes that the FCC has a unique opportunity in approving the Comcast/NBC merger to require Comcast act “fairly and equitably” on the Internet.

Level 3 isn’t the only company looking for conditions on the Comcast-NBC merger: smaller cable companies have asked for conditions guaranteeing reasonable rates for handling NBC-owned broadcast and cable channels.