Cogent CEO bashes TWC deal to FCC

The "most hated man in telecom" is taking on the most powerful man in cable.

Dave Schaeffer, the founder and chief executive of Cogent Communications, has emerged as one of the most outspoken opponents of Comcast CEO Brian Roberts and his $45 billion bid for Time Warner Cable.

While Wall Street believes the deal to combine the nation's two biggest cable providers will pass regulatory scrutiny, Schaeffer has been busy bashing the proposal in public and in private meetings with the Federal Communications Commission, the Justice Department and various state attorneys general.

"Our concern is that it will limit competition," Schaeffer told The Post. "It will allow Comcast to further extend its monopoly power over its customers."

Schaeffer — who earned the most-hated title from Forbes for picking fights with much larger rivals — has been headed for a showdown with Roberts for some time.

Schaeffer's main concern is so-called interconnection ports, which allow Comcast and other Internet service providers, or ISPs, to connect to content services like Netflix.

He claims ISPs are "manipulating" these ports and creating traffic bottlenecks to the detriment of consumers. And with the proposed merger, he feels the problem will only get worse.

There's no question Schaeffer's argument is self-serving. But consumer advocates have also cried foul over ISPs' dealings at the edges of the Internet, saying they're taking advantage of a lack of regulatory scrutiny in that area.

Companies including Netflix pay Cogent to act as Internet middleman and carry their traffic. Cogent must be able to pass along traffic to other network providers for Netflix content to reach people's homes.

In the past, this exchange happened without any money trading hands, but that is changing as congestion grows and ISPs start to demand payment, a practice known as paid peering.

The ISPs are also starting to seek deals to connect directly to content providers, thus cutting out middlemen like Cogent. And this is what really riles Schaeffer.

In February, Netflix and Comcast announced a multi-year interconnection deal that gives Netflix a "more direct connection" and aims to cut down on irritating delays.

But critics of such dealings, including Netflix CEO Reed Hastings, have argued that ISPs are forcing these payments by refusing to upgrade interconnection ports and then demanding money to fix the delays.

To bolster his case against the Comcast-Time Warner deal, Schaeffer forwarded a letter he received from Comcast's legal department to the DOJ responding to his complaints about the interconnections.

The letter, he claims, is proof that Comcast is "manipulating" Internet traffic on the edges of its network because that area is not technically governed by its 2009 agreement with the FCC — a condition of its deal to buy NBCUniversal — to maintain a fair and open Internet under so-called net neutrality rules.

Comcast's agreement with the FCC was "never designed to deal with peering and Internet interconnection," a spokeswoman for Comcast said.

"There has been no company that has had a stronger commitment to the openness of the Internet than Comcast," she added.

Schaeffer also contends that Netflix won't be coming out against the Comcast-Time Warner merger because it agreed not to as part of its deal with Comcast.

"This suggestion is totally false. Our agreement with Netflix has nothing to do with our Time Warner Cable transaction," a spokeswoman for Comcast said.

A source close to Netflix also denied any quid pro quo, and said Netflix is still deciding whether or not to oppose the deal.

Nevertheless, Schaeffer appears confident that Hastings will not stand against a deal when the time comes. And he didn't blame the Netflix chief one bit.

"That deal was done under duress. It was not am arms-length deal," he said.

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