Comcast would pay $16 million in proposed Internet settlement

One million Comcast Corp. high-speed Internet customers could be eligible for rebates under a $16 million proposed class-action settlement stemming from the cable company's disruption of peer-to-peer Web traffic.

The rebates could be $16 per customer, a plaintiffs' lawyer and the company said yesterday.

The settlement, disclosed in federal court in Philadelphia, still needs final approval by U.S. District Judge Legrome D. Davis. A hearing on the settlement is scheduled for June.

Six individual suits were consolidated into one case in Philadelphia, court documents show. Plaintiffs' attorneys could claim up to $3 million from the $16 million in fees.

Comcast did not admit wrongdoing, and the company believes its Internet practices were correct - although Comcast dropped them under political pressure in 2008.

The number of 1 million Comcast customers is an estimate contained in court documents. Comcast Internet customers will have to say they used peer-to-peer software programs between 2006 and 2008 to collect the rebates or refunds. The most popular of these software programs was BitTorrent; others were Ares, eDonkey, FastTrack, and Gnutella. For information, Comcast customers can visit www.p2pcongestionsettlement.com.

Mark Todzo, a lawyer with the Lexington Law Group in San Francisco who represented plaintiff Jon Hart, said yesterday that he was pleased with the settlement. Hart, a California resident and Comcast Internet customer, contacted Todzo's law firm after he could not share video of Grateful Dead concerts, Todzo said.

Comcast said it disrupted the traffic of some heavy Internet users - so-called Internet hogs - to maintain speeds for millions of others. The Philadelphia cable giant, the nation's largest provider of residential Internet, called the practice "reasonable network management."

But critics claimed that Comcast viewed peer-to-peer online video as competition for cable TV and was making the peer-to-peer software difficult to use.

In August 2008, the Federal Communications Commission, then with Kevin Martin as its chairman, ordered Comcast to give the agency more details of its Internet practices, submit a plan on how it intended to stop interfering with Internet traffic, and disclose the new Internet management practices to customers. No fine was levied.

Comcast has appealed the FCC enforcement action to a federal court. A hearing on the case is scheduled for Jan. 8.

Comcast said the proposed $16 million settlement would end the class-action part of the controversy.

In a statement, the company said: "We are pleased to have reached a settlement in these consolidated class-action lawsuits. Although we continue to believe that our network-management practices were appropriate and in the best interests of our customers, we prefer to put this matter behind us and avoid a potentially lengthy and distracting legal dispute that would serve no useful purpose."

Comcast no longer uses the Internet practices that led to the lawsuits, the company says.