Reed Hastings of Netflix (NASDAQ: NFLX) may have found anxiety in Comcast executives of the ability of their Xfinity App to compete against competitors on the open Internet. Comcast (NASDAQ: CMCSA) launched the Xfinity App on the X-Box 360 to showcase its large program library to customers. Consequently, the consumption of programming through the app does not count against Comcast customer’s data limit for the month. What Netflix CEO Hastings found was that if customers used a competing app their data cap was counted against them. See (Netflix’s Reed Hastings takes a swing at Comcast in the name of net neutrality)
Lack of Confidence in App
If Comcast leadership is not confident, as its data rule implies, that the Xfinity App cannot compete against rivals over a Net Neutral Internet, then the app should be pulled until confidence is restored. Trying to give the app a boost by favoring Comcast customers only, would seem to alienate existing customers on a broad scale. The move is akin to the “Berlin Wall” in which Soviet Union citizens were not allowed to cross the border into West Germany. The closed wall did not work then and does not work now.
Raising Net Neutrality | Regulator Ire
Not only will such anti-competitive tactics hurt Comcast in the long-term, it will most likely level more antitrust scrutiny upon the cable giant with a broadband customer base of 17.4 million which represents 32% of its total stock price. Having such a large and dominate Internet presence does not bode well in regulatory circles when Comcast continues to favor the Xfinity App over leading competitors like Netflix. It opens the door to more complaints, both externally, from the public at-large, and internally with its own customers. See (Comcast Could Stir Net Neutrality Debate with Xfinity for Xbox)
Net Neutrality Rules were designed to protect an open and free Internet where service providers should not favor one competitor over another in use of its services.
“Network neutrality (also net neutrality, Internet neutrality) is a principle that advocates no restrictions by Internet service providers or governments on consumers’ access to networks that participate in the Internet. Specifically, network neutrality would prevent restrictions on content, sites, platforms, types of equipment that may be attached, and modes of communication.” See (Network neutrality)
A Better Business Decision: Open Xfinity App to Competition
Realistically, Comcast would be better off letting Xfinity compete directly with other content apps over its broadband network. It indicates a complete lack of confidence in Comcast program offerings and its ability to stand up to a competitive landscape. The decision to block customers from judging benefits of the app by creating an in-house advantage can rankle customers, destroying loyalty rather than building long-term affinity. It is amazing how a company can (shoot itself in the foot) with little or no effort. Reed Hastings is right, Comcast should compete over the open Internet as its Xfinity App competitors must do.
Larry Downes of Tech Freedom has an alternate view of the Xfinity controversy. See (Comcast Is Not Trying to Kill Net Neutrality, Says Larry Downes)