Comcast (NASDAQ:CMCSA) has released a statement strongly in favor of President Barack Obama's open Internet proposal.
The company, which has a deal with Netflix (NASDAQ:NFLX) in which the streaming video provider pays the ISP for faster and more reliable access to its subscribers, clearly knows that this is not the stance most consumers expected it to take. It demonstrated that by headlining its press release "Surprise! We Agree With The President's Principles On Net Neutrality: Reiterating Our Strong Support For The Open Internet."
The news is most certainly surprising since Comcast has been willing to cash Netflix's checks, which some see as going against the concept of open Internet as defined by the president. Net neutrality is, however, not a fixed target and the company believes it's very much on the side of the open Internet as it detailed in the statement from David Cohen, executive vice president and chief diversity officer:
We have publicly supported the FCC adopting new, strong Open Internet rules. We have stated on numerous occasions that we believe legally enforceable rules should continue to include strong transparency, no blocking, and anti-discrimination provisions. We don't prioritize Internet traffic or have paid fast lanes, and have no plans to do so.
Comcast has openly stated that it does not see its deal with Netflix as a net neutrality issue, a point made by New York Times reporters Edward Wyatt and Noam Cohen at the time it was announced earlier this year:
People close to the deal characterize it as a common arrangement. Content companies frequently pay a middleman to carry traffic to a broadband provider, which then moves through its pipes and into a consumer's home.
It's a question of how you define net neutrality and Comcast's definition seems to differ from the president's, but room remains for interpretation.
What is the Comcast/Netflix deal?
Comcast maintains that its deal with Netflix has nothing to do with offering the video service preferential treatment. Netflix has argued that it had to pay in order to ensure its customers received decent service.
"Netflix agreed to pay Comcast for direct interconnection to reverse an unacceptable decline in our members' video experience on the Comcast network," Netflix wrote on its blog in April. "These members were experiencing poor streaming quality because Comcast allowed its links to Internet transit providers like Level3, XO, Cogent and Tata to clog up, slowing delivery of movies and TV shows to Netflix users."
Netflix even filed a petition with the Federal Communications Commission saying that speeds for its subscribers became so slow in December 2013 and January 2014 that customers grew irate.
"For many subscribers, the bit rate was so poor that Netflix's streaming video service became unusable," the company wrote. "Some of them canceled their Netflix subscription on the spot, citing the unacceptable quality of Netflix's video streams and Netflix's inability to do anything to change the situation."
Comcast, at the time the deal was announced, was very clear that it did not see it as offering a fast lane or anything else that would be considered a violation of net neutrality. It explained the deal as follows in a statement:
Working collaboratively over many months, the companies have established a more direct connection between Netflix and Comcast, similar to other networks, that's already delivering an even better user experience to consumers, while also allowing for future growth in Netflix traffic. Netflix receives no preferential network treatment under the multi-year agreement, terms of which are not being disclosed.
It's easy to see why consumers would be confused -- a fact Comcast seems well aware of -- but the company has been very consistent in its opinions.
While some, myself included, may have issues with how Comcast defines an open Internet, the company made versions of the statement in the "Surprise" release in six other statements since March.
Comcast may recognize our surprise, and there is certainly room to disagree with its version of "open," but it has not wavered from its stance.
Comcast needs the president
Comcast needs FCC approval for its $45 billion purchase of Time Warner Cable (UNKNOWN:TWC.DL), and Obama has proven to have influence over FCC Chairman Tom Wheeler, who raised money for his campaigns before being appointed to head the independent panel. It's hard not to take the cynical view that Comcast wants the public relations boost from supporting the open Internet -- which the public overwhelmingly supports -- while not seeing it in quite the same way as the president or much of the public.
It is a surprise, but maybe it shouldn't have been. Comcast supports the open Internet, it just may not define it the same way as others.
Daniel Kline owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), Google (C shares), and Netflix. The Motley Fool owns shares of Apple, Google (A shares), Google (C shares), and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.