In a letter to investors today, Netflix CEO Reed Hastings suggested that Comcast was competing unfairly in the streaming-video sector.
As part of his company's first-quarter earnings report, Hastings wrote that Comcast was providing the company's Xfinity Web-video service a competitive advantage not offered to Netflix or other competitors.
"Comcast caps its residential broadband customers at 250 gigabytes per month," Hastings wrote. "On the Xbox the Netflix app, the Hulu app, and the HBO GO app, are all subject to this cap. But Comcast has decided that its own Xfinity Xbox app is not subject to this 250 gigabyte cap. This is not neutral in any sense."
Netflix reported earnings today that surpassed analysts estimates for subscriber growth and revenue but that didn't save the company's share price from plummeting in after-hours trading. The stock was down 16 percent, or $16, to $85 at 2:20 p.m. PT.
Hastings has begun to regularly complain in public about Comcast's decision not to count Xfinity's data against the company's cap. Netflix doesn't typically criticize competitors in public so this is likely a sign that the issue is important to the Web's top video service.
Comcast responded to one of Hastings broadsides this month and said that the data caps don't apply to Xfinity because its data travels over its own private IP network, and not over the public Internet. Hastings isn't buying that excuse.
"The Xbox is a pure Internet device with a single IP address, works over a consumer's home Wi-Fi, and data to the Xbox is Internet data," Hastings wrote. "When the Xfinity Xbox app uses lots of bandwidth, it competes for that bandwidth with all other Internet usage and users in the home. The Xfinity Xbox app 'speaks' TCP/IP like any other Internet device. The only difference between the Xfinity Xbox data and Netflix Xbox data is the Xfinity data is favored by Comcast exempting it from the cap."
Hastings concluded that "Comcast could raise the cap and make it apply equally or just eliminate the caps. Net neutrality principles mean a level playing field for all Internet applications."
More to come