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Netflix Is Right: Comcast May Be Evil

It's been three weeks since Netflix (Nasdaq: NFLX  ) CEO Reed Hastings took Comcast (Nasdaq: CMCSA  ) (Nasdaq: CMCSK  ) to task on his Facebook feed.

"Comcast no longer following net neutrality principles," he wrote at the time. "Comcast should apply caps equally, or not at all."

His comment was based on his own experience as a Comcast subscriber. He was using his Xbox to stream Netflix, Hulu, Time Warner's (NYSE: TWX  ) HBO GO, and Comcast's own Xfinity, and lamented how Comcast as an Internet provider doesn't count Xfinity usage against the data cap. Why should Xfinity as a stream be any different than other video apps? The move encourages users to rely more on Xfinity and avoid third-party services.

Well, it may get even murkier than that.

Streaming Media Blog's Dan Rayburn now claims to have proof that Comcast is prioritizing Internet traffic for Xfinity to the detriment of Hastings' company and every other third-party streaming provider.

"Based on details I have gotten from those who have looked at how packets are marked on their home broadband connections provided by Comcast, packets are in fact being marked with Quality of Service tags," he writes, pointing out how media files from Xfinity are being marked as high priority while streaming media from MLB, Hulu, Netflix, and others are being tagged as having low priority. Even though the non-Xfinity traffic is originating from the servers hosted by Level 3 (Nasdaq: LVLT  ) and Akamai (Nasdaq: AKAM  ) , Rayburn claims that Comcast is the one putting the tags on the streams.

This is a smoking gun, though it's not necessarily loaded. The intent is there to treat non-Xfinity streams as second-class netizens, but until we get verified reports that Comcast is deliberately slowing down third-party streams during peak usage periods we can't tag the country's largest cable provider as being officially evil.

Right now it's just a matter of leaving Comcast with some serious explaining to do.

If the answers don't add up, then we have a smoking pitchfork.

Stream on
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Longtime Fool contributor Rick Munarriz has been a Netflix subscriber and shareholder since 2002. He does not own shares in any of the other stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

Motley Fool newsletter services have recommended buying shares of Netflix. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (2) | Recommend This Article (12)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 08, 2012, at 4:55 PM, neamakri wrote:

    I imagined this would occur.

    I want an application (app) for my home computer that will put "high priority" tags on everything for me. Everybody else can come in second.

  • Report this Comment On May 10, 2012, at 11:42 PM, BMFPitt wrote:


    You can tag them as whatever you want, but that tag will get thrown out by your ISP as soon as it leaves your router.

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