Level 3 Communications Inc asked U.S. antitrust officials to set conditions on Comcast Corp's planned acquisition of NBC Universal that would assure unfettered access to all internet content.

The move represents Level 3's latest retaliation against a fee Comcast is charging it for increased network traffic.

Level 3 operates internet backbone networks but also offers content delivery network (CDN) services, which enable clients like Netflix to store and stream movies online. The CDN business has grown as consumers increasingly turn to the internet for entertainment and shopping.

The sheer rise in internet traffic has prompted Comcast, which provides the last mile of internet connection to consumers' homes, to demand a recurring fee from Level 3 to transmit video and other online content to customers.

Level 3 is disputing the fee, and in a letter on Thursday, asked the Federal Communications Commission and the Department of Justice to intervene by considering setting conditions on the Comcast-NBC Universal deal.

Absent governmental restrictions, Comcast and other residential broadband internet service providers have the power to leverage their relationships with broadband consumers to act in an anticompetitive manner, Level 3 said in the letter.

Level 3's suggested conditions include that Comcast should interconnect with internet backbone carriers on non-discriminatory, fair and reasonable terms, and that Comcast may not utilize its dominant control over access to its subscribers in order to unfairly charge internet backbone carriers for interconnection to its network.

Last December, Comcast agreed to buy a majority stake in NBC Universal from General Electric Co to strengthen its content distribution network, amid apprehensions about the success of big media deals.

Comcast -- the largest cable distributor and leading internet service provider to homes in the U.S. -- wants to use NBC so it can deliver programing to audiences however they may want it - through TV sets, personal computers or mobile devices.

Comcast said in October that it was on track to close the deal by the end of the year.

While this disagreement with Comcast clearly has broad internet implications, the FCC and the Department of Justice have a unique and timely opportunity to compel Comcast to act fairly and equitably through the NBC Universal transaction, Level 3 Chief Executive James Crowe said in the letter.

The regulators should also send a clear message to all other residential broadband internet service providers that unreasonable and discriminatory terms cannot be used as a tool to impede competition or foreclose subscriber choices on the Internet, Crowe said.

Level 3 said it had tried to resolve the matters with Comcast but that it was apparent no resolution is possible.

(Reporting by Ritsuko Ando in New York and Abhinav Sharma in Bangalore; Editing by Hans Peters)

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