November 30, 2010, 7:15 PM — Shares of Netflix (NASDAQ: NFLX) jumped 6.98, or 3.5 percent, to 205.90 on Tuesday -- despite a nasty dispute between Comcast and broadband backbone provider Level 3 Communications that potentially could hurt the video-on-demand company's business.
Earlier in the day Netflix shares reached another all-time high of 206.80.
Level 3 is one several companies that Netflix uses to stream and store the company's growing inventory of movies and television shows.
On Monday Level 3 said Comcast is demanding that it pay a recurring fee to deliver video content to Comcast customers, which Level 3 argues is a violation of the Federal Communications Commission's "net neutrality" principles. In a press release, Level 3 said Comcast threatened on Nov. 19 to prevent its own customers from receiving online video and other web traffic unless Level 3 paid for delivery.
This, of course, leads right back to Netflix, which recently announced that more of its customers now stream its content instead of ordering DVDs through the mail. So the stakes for Netflix in this showdown presumably are high, and the implications far-reaching if net neutrality -- the notion that ISPs must treat all Internet traffic equally -- comes crashing down.
In fact, the FCC reportedly intends to make a decision on net neutrality rules at its Dec. 21 meeting, according to the communications policy group Media Access Project. Meanwhile, the Wall Street Journal reports that the FCC "is expected to propose net neutrality rules as soon as Tuesday evening which would bar Internet providers from deliberately slowing or blocking legal Internet traffic."
Shares of Comcast (NASDAQ: CMCSA) were down 17.5 cents, or 0.9 percent, to 20.04 on Tuesday, while shares of Level 3 (NASDAQ: LVLT) were virtually unchanged at $1.005, up from Monday's close of $1.00.
Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.