WASHINGTON --- Comcast is coming under scrutiny from regulators after it demanded higher fees to carry streaming Netflix videos over its cable network.
Julius Genachowski, the chairman of the Federal Communications Commission, said Tuesday he will seek more information about a dispute involving Comcast and Level 3 Communications Inc., which distributes Netflix videos over the Internet.
For now, the dispute is unlikely to affect Netflix customers. Level 3 has agreed to pay higher fees to Comcast while it takes its complaint to regulators.
Comcast has demanded Level 3 pay a regular fee because of the number of Netflix videos downloaded over the cable network has soared. Level 3 is now sending far more Internet traffic over Comcast's network than Comcast sends over Level 3's network, the cable company said.
Level 3 is complaining that Comcast is setting up a "toll booth" on the Internet to disadvantage competitors and extract more money from them. Such an approach violates FCC guidelines on "net neutrality" that are mean to ensure fair treatment of all Internet traffic, Level 3 argues.
The dispute has flared up at an awkward time for Comcast. Regulators are in the late stages of reviewing its proposed purchase of NBC Universal.
Any day now, the FCC is also expected to announce new rules meant to promote net neutrality.
FCC guidelines prohibit network operators from discriminating against other Internet companies by blocking or slowing down access to their Web sites. Still, a federal court ruling this year in another case involving Comcast undercut the agency's authority and spurred the FCC to pursue stronger measures.
Comcast insists it hasn't violated neutrality principles, saying it's not fair for Level 3 to send more traffic over its cable network without paying for it. Typically, network operators exchange traffic for free when similar amounts flow in each direction.
Joe Waz, Comcast's public-policy counsel, said Level 3 itself has insisted on higher fees from other network operators when they send more traffic its way.
"Level 3's position is simply duplicitous," he wrote.
Last month, Level 3 signed an agreement to house Netflix's huge video library. When a Netflix customer who subscribes to Comcast Internet service downloads a video, it's pulled from Level 3 servers.
The result is more traffic and further strain on Comcast's Internet network. The cable company said Level 3 -- and, indirectly, Netflix -- should bear some of the cost.
Netflix eventually plans to distribute all its videos over the Internet.
"They don't want to pay the same costs as their competitors," said Sena Fitzmaurice, a senior Comcast executive involved in regulatory issues. She said Comcast is sending the FCC information to explain its decision.
If the FCC declines to get involved, Netflix could be forced to raise the fees it charges video customers to download movies.