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Netflix Is Right: Comcast May Be Evil

By Rick Munarriz - Updated Apr 7, 2017 at 3:51PM

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Comcast could be sending Netflix to the back of the class.

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
Motley Fool co-founder David Gardner has been a fan of Netflix as a disruptor for nearly a decade, but there's a new Rule-Breaking mutlibagger that's getting him excited these days. Learn more in a free report that you can check out right now.

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.

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Stocks Mentioned

Netflix, Inc. Stock Quote
Netflix, Inc.
$229.94 (-1.52%) $-3.55
Comcast Corporation Stock Quote
Comcast Corporation
$38.16 (-1.11%) $0.43
Time Warner Inc. Stock Quote
Time Warner Inc.
Akamai Technologies, Inc. Stock Quote
Akamai Technologies, Inc.
$95.08 (-1.35%) $-1.30

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