With net neutrality rules still not defined by the Federal Communications Commission, Comcast is being accused of threatening the open Internet by blocking Level 3 Communications from doing business by imposing recurring fees for the use of its network.

According to a statement made by Thomas Stortz, chief legal officer of Level 3, on Nov. 19, 2010, Comcast informed Level 3 that, for the first time, it will demand a recurring fee from Level 3 to transmit Internet online movies and other content to Comcast’s customers who request such content.

“By taking this action, Comcast is effectively putting up a toll booth at the borders of its broadband Internet access network, enabling it to unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity delivered content,” Stortz said. “This action by Comcast threatens the open Internet and is a clear abuse of the dominant control that Comcast exerts in broadband access markets as the nation’s largest cable provider.”

Level 3 Communications recently partnered with Netflix to deliver streaming movies and TV shows to customers and operates one of several broadband backbone networks, which are part of the Internet and which independent providers of online content use to transmit movies, sports, games and other entertainment to consumers, according to Stortz.

“When a Comcast customer requests such content, for example an online movie or game, Level 3 transmits the content to Comcast for delivery to consumers,” he explained. “Level 3 believes Comcast’s current position violates the spirit and letter of the FCC’s proposed Internet Policy principles and other regulations and statutes, as well as Comcast’s previous public statements about favoring an open Internet.

Comcast responded, accusing Level 3 of maintaining a “duplicitous” position and working to gain an unfair advantage over its competitors. Joe Waz, senior vice president of external affairs and public policy counsel at Comcast, in this blog post said that “Level 3 has inaccurately portrayed the commercial negotiations between it and Comcast. These discussions have nothing to do with Level 3’s desire to distribute different types of network traffic.”

“We are happy to maintain a balanced, no-cost traffic exchange with Level 3,” Waz continued. “However, when one provider exploits this type of relationship by pushing the burden of massive traffic growth onto the other provider and its customers, we believe this is not fair.” Netflix, which recently announced new subscription plans, wasn’t directly mentioned in Level 3′s statement.

Level 3 has stated that it agreed to pay Comcast “under protest” last week and noted that the fee is in violation of proposed rules set forth by the FCC that guard against Internet providers favoring certain types of traffic on their networks. Level 3 officials said that it is planning on filing a formal complaint with the FCC in the coming days.

“Now, Level 3 proposes to send traffic to Comcast at a 5:1 ratio over what Comcast sends to Level 3, so Comcast is proposing the same type of commercial solution endorsed by Level 3. Comcast is meeting with Level 3 later this week for that purpose,” Waz said.

As TechZone reported on Sept. 30, House Democrats shelved their efforts to broker a compromise between phone, cable and Internet companies on rules that would prohibit broadband providers from blocking or degrading online traffic flowing over their networks.

Internet companies argue that regulations are needed to prevent phone and cable operators from blocking Internet phone calls, online video and other Web services that compete with their primary lines of business.