Netflix Considers Fighting for Net Neutrality by Harnessing Internet’s Sense of Entitlement

Netflix, as should be fairly obvious, has a significant financial stake in the net neutrality fight. If Internet service providers charge companies based on how much bandwidth they use, obviously that’s going to roll over to companies like Netflix, whose customers may use lots of it to stream the next season of House of Cards. So in their latest letter to investors, Netflix is assuring that they’ll fight tooth and nail to avoid this situation.

Via Entrepreneur:

Netflix is threatening to rally its roughly 34 million domestic users against a hotly contentious ruling last week overturning laws that heretofore stated all data on the internet should be treated equally.

The ruling by the U.S. Court of Appeals against net neutrality in a case brought by Verizon against the FCC means that service providers can now theoretically charge inflated fees to companies like Netflix, for instance, whose video streaming facilities require more bandwidth.

Translation: the end of net neutrality could hypothetically mean that streaming quality diminishes or that consumers must pay more to ensure that streaming bandwidth remains high.

"Were this draconian scenario to unfold with some ISP, we would vigorously protest and encourage our members to demand the open internet they are paying their ISP to deliver," Netflix pledged in a letter to investors.

I don’t think the word “draconian” means what they think it means. Is there any other provider of limited resource (and yes, for now, bandwidth is still a limited resource) that doesn’t charge those who consume more a higher amount of money than those who consume less?

Follow this story and more at Reason 24/7.

Spice up your blog or Website with Reason 24/7 news and Reason articles. You can get the widgets here. If you have a story that would be of interest to Reason's readers please let us know by emailing the 24/7 crew at 24_7@reason.com, or tweet us stories at @reason247.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Almanian (yeah, I said it)||

    Someone should write a book a couple hundred years ago that explains how "markets" and "supply and demand" work, that's basically not a "theory", but how human beings actually behavem historically.

    And then Netflix should read it and learn. Fuck them.

  • ||

    And then Netflix should read it and learn.

    I think netflix is very well educated in economics and understand in minuet detail how regulatory capture works and how it can benefit them.

  • califernian||

    ^This

  • Another David||

    My ISP charges me for higher speeds, which translates directly into higher Netflix data use (since all such services will send less data over a slower connection). So aren't they already getting paid extra for the use of that resource?

  • TheZeitgeist||

    Packets on a pipe are like electrons from power company: You want more? Pay more to the utility based on your meter. You want more electrons at once (i.e., faster speeds), then you need to install big current capacity to accommodate it, and of course that costs more. So you've got to pay for it.

    Net neutrality support from me begins with picking who pays more or less, i.e. packets for MSNBC cost more on Time Warner's network because Time Warner owns CNN (a competitor) and Comcast owns MSNBC. Then we're talking, because that's bullshit and the physical reality of landpipes mean these companies have captive customers (no Comcast where Time Warner is, etc.).

    But in regards to the basic 'dumb pipe' utility of getting packets at certain volumes and speeds, that is a utility and big users should pay big prices for using all that infrastructure so much.

  • Cyto||

    The big users do pay big prices. Netflix pays their ISPs for the bandwidth they use.

    This case is about netflix paying your isp for the bandwidth that you use in accessing the Netflix service. Bandwidth that you have already paid your ISP for.

    This is about giving Verizon, Comcast, AT&T, TimeWarner et al the ability to price competitors out of the market. Since they sell cable TV services and video on demand, they'd like to charge Netflix, Amazon, Hulu and Google for sending video to their customers. That would give them an inherent price advantage, in addition to allowing them to profit twice from having you as a customer.

    If there were not a state-granted monopoly on the last mile, this would not be such a problem. As it is, a large portion of the population has no choice of cable TV provider or ISP (unless you want to go with DSL or dialup at a fraction of the speed).

  • Heroic Mulatto||

    You mean scarcity of something doesn't drive innovation? In particular, an innovation that would make all this debate moot, for a long time anyway.

  • kbolino||

    Something, something, link, something, artificial sweetener.

  • Heroic Mulatto||

  • PH2050||

    Pretty fuckin' sweet, Heroic Mulatto.

    Combine that with this and we're set for ubiquitous online interaction containing audio/video.

  • Pelosi's Rabbit||

    I can stream 64 hours of Netflix in one second? Sweet! I'll be through my queue in no time.

  • widget||

    I've had a Netflix account for 5 years and I've watched the first 3 episodes of 'Breaking Bad', nothing else. If I could remember my f*ck!ing password (it's not '12345') I'd discontinue it.

  • Almanian (yeah, I said it)||

    hah! My wife got it. I've watched 1 or 2 things. I think she and the kids use it....dunno.

    I'm just an ATM at my house....ATM and repairman.

  • Hugh Akston||

    Do you ever fix the cable?

  • bassjoe||

    Um, really? I smell BS. Netflix has customer support. If that doesn't work, just tell your credit card to stop paying and the problem will work itself out.

  • widget||

    I'm not being mendacious. Context. I live in Southern California. It's sunny and 78 here today. It's very expensive to live here though. $7.99/mo for a Netflix account is a blip.

  • All-Seeing Monocle||

    Ezra?

  • Notorious G.K.C.||

    "If I could remember my...password (it's not '12345')"

    No, that's your luggage combination.

  • The Last American Hero||

    House of Cards. Worth your time and money.

  • ||

    You'd think that Netflix, which was so successful in partnering with the Post Office to try and get their DVDs to and from people in record time, could possibly think of partnering with ISPs to see if they could cut some deal to get their streaming sent with high bandwith. You know, actually thinking of a way to beat the competition instead of trying to get the government to handicap someone else.

  • widget||

    Netflix CEO, Reed Hastings, is a wise guy.

    http://www.nytimes.com/2009/02......html?_r=0

  • bassjoe||

    Is there any other provider of limited resource (and yes, for now, bandwidth is still a limited resource) that doesn’t charge those who consume more a higher amount of money than those who consume less?
    ----
    Um, ISPs already charge different amounts for their limited resource. There are multiple pricing tiers based on the speed of your connection; those who want higher speeds presumably want to consume more.

    I'm not necessarily pro-net neutrality. But our over-regulated ISP "market" -- where most geographic areas have one or two crappy options for Internet (protected by a government-granted monopoly, most likely) -- makes it impossible for consumers to ditch an ISP that is demanding atrocious fees for using Netflix. Until there's REAL competition in our ISP market, which will require a complete top-down reform that'll take years to implement, net neutrality must be around.

  • Sevo||

    ..."Until there's REAL competition in our ISP market, which will require a complete top-down reform that'll take years to implement, net neutrality must be around."

    So you're in favor of a crappy gov't regulation since the existing crappy gov't regulation has screwed things up?
    And when this one does the same, can we presume you'll be in favor of the next crappy gov't regulation to screw up that one?

  • ||

    "The government created this monopolistic shit sandwich in the first place, so let's let the government control the internet to fix it!"

    Genius.

  • ||

    Most markets have at least 3 to 5 ISPs

    Phone

    Cable

    Cell (which include multiple carriers)

    Satellite

    You are full of shit.

    Also I fail to see how net neutrality (taking away potential revenue from ISPs) is going to increase competition. Perhaps you can explain how in the left wing fantasy land that you live in how that works.

  • Head Stomp||

    Phone and satellite ISPs are too slow
    Cell ISPs have too low data caps
    Cable ISPs are too evil

    waaaaaah! I have no choices. Moar government regulation.

    /reddit

  • JeremyR||

    Satellite? Seriously?

    I am stuck with it because other than dial-up, it's my only choice, and I get a whole whopping 500 megabytes of bandwidth a day.

    Why, I could watch a sitcom in SD with that much.

  • Geoff Nathan||

    The city I live in has Comcast, AT&T and Dish. Each has disadvantages. And, except for Dish, each is regulated by some government or other, so to call this competition is absurd. In most American cities there is no free market in ISP's--cable is regulated by municipalities and AT&T is a 'common carrier'.

  • Cyto||

    In my location in a large metropolitan area in south Florida I have the choice of DSL (too slow for video streaming, plus infrastructure too old for reliable service), Comcast cable (no fiber services like FIOS in my area) or cell service (which has caps that make netflix a non-starter).

    So for us cable is a monopoly if you want streaming video services, particularly at hi-def. And there is only one cable provider. Comcast.

  • Notorious G.K.C.||

    "Netflix is threatening to rally its roughly 34 million domestic users against a hotly contentious ruling last week overturning laws that heretofore stated all data on the internet should be treated equally."

    This is a confusing sentence. Here's how I would rephrase it: "Netflix is threatening to rally its roughly 34 million domestic users in support of 'net neutrality' laws. These laws require all date on the Internet should be treated equally. Recent court decisions overturned these laws, and Netflix wants them reinstated."

    Summarizing court decisions in the media can lead to confusing sentences like "the Supreme Court today overturned a lower-court decision which declared unconstitutional a law banning skateboards in public parks." You need to really puzzle through that one. How about - "an anti-skateboard law won a victory in the Supreme Court today, and skateboarders lost. The Court upheld the law in the face of a constitutional challenge. This case overturned a lower-court opinion which found the law unconstitutional."

  • widget||

    I don't grok the fed's interest in this to begin with. Why do federal courts even entertain these cases?

    The feds do have an narrow interest in RF propagation. You can't make your radio transmitter's signal stop at a state border.

  • ||

    I don't grok the fed's interest in this to begin with. Why do federal courts even entertain these cases?

    More people to boss around, bigger budgets, bigger salaries, more power, more industries politicians can squeeze for money, more friends politicians can help win in the market more enemies politicians can help lose.

  • Sevo||

    "How about - "an anti-skateboard law won a victory in the Supreme Court today, and skateboarders lost. The Court upheld the law in the face of a constitutional challenge. This case overturned a lower-court opinion which found the law unconstitutional.""

    Agreed.
    You almost have to diagram the sentence and add up the + and - clauses to figure out what is intended.

  • Stilgar||

    If Internet service providers charge companies based on how much bandwidth they use, obviously that’s going to roll over to companies like Netflix,

    Well golly gee! I never knew that Netflix pays *NOTHING* for their internet connectivity!

    What are you people, author included, high? Netflix most certainly DOES pay for its bandwidth usage, just like every other company doing business on the internet. Did you think they just hooked their servers up and like magic the connection is made?

    The issue here is that certain ISPs (ie, ATT) would like to be able to double dip and charge either/both the consumer and Netflix again. It is a really horrible thing for these ISPs when their customers use the service which they have paid.

  • widget||

    AT&T is a curiosity to me. Why did Verizon get broken into Verizon (land line) and Verizon Wireless while AT&T did not?

  • Cdr Lytton||

    VZW was a joint venture until last year between Vodafone and Verizon. Now it's wholly owned by Verizon. Most large phone companies are a collection of legal entities with varying degrees of uniform branding depending on their preference and history.

  • Sevo||

    "The issue here is that certain ISPs (ie, ATT) would like to be able to double dip and charge either/both the consumer and Netflix again. It is a really horrible thing for these ISPs when their customers use the service which they have paid."

    And you propose the gov't regulation is superior?

  • Stilgar||

    In this case, and only to the extent that non-adminstrative traffic be treated on par. The "internet" is a network based upon peering between networks (ie, regional, long haul, etc). It has always been the case that ISPs do not get paid directly by every content provider - from day one.

    If you are not prepared to accept that not every piece of data will be originated by and terminated by two of your customers then you should not be peering and instead simply run a private wlan. Of course, you may lose most of your customers if you do that too.

  • Sevo||

    Stilgar|1.23.14 @ 8:32PM|#
    "In this case, and only to the extent that non-adminstrative traffic be treated on par."

    And I'm going to argue that this will not happen.
    Whatever double-dipping is going on stands the chance of being corrected with new tech or just plain additional competition. Any 'net neutrality' law is simply the start of further regulation until we have censorship of one sort or another (NOT the "corporate censorship" posited by our resident imbecile).

  • Another David||

    Government regulation no, consumer complaints sure. They're already overpaying for internet service on average, and they're the ones who'd pay the double-dip (triple dip?) in the form of higher Netflix subscription rates. So why shouldn't they raise a stink about the plan?

  • Sevo||

    Another David|1.23.14 @ 10:14PM|#
    "Government regulation no, consumer complaints sure. [...] So why shouldn't they raise a stink about the plan?"

    Because they're supporting government regulation, that's why.

  • Tony||

    Bandwidth is but one of many issues in the net neutrality debate. The parade of horribles from getting rid of net neutrality is 1) worse than a couple of untested market assumptions that amount to a couple of quasi-threats from major telecom companies and 2) contains several horribles the telecoms have already gleefully admitted to wanting to make happen.

  • Sevo||

    Tony|1.23.14 @ 7:55PM|#
    "1) worse than a couple of untested market assumptions that amount to a couple of quasi-threats from major telecom companies and"
    You mean "worse than an a lefty ignoramus thinks might happen if the government controls everything.

    "2) contains several horribles the telecoms have already gleefully admitted to wanting to make happen."
    Yes, of course. What "horribles"? People paying for what they use?

  • Tony||

    As I said, bandwidth is not the only issue. Neutrality advocates are mostly concerned about corporate censorship.

    You should not call yourselves libertarians. You should just be considered radical capitalists. You obviously cannot conceive of an aspect of freedom that isn't on corporate America's to-do list.

  • Sevo||

    Tony|1.23.14 @ 8:27PM|#
    "As I said, bandwidth is not the only issue. Neutrality advocates are mostly concerned about corporate censorship."

    Sorry, there is no such thing as "corporate censorship', but imbeciles aren't expected to know that.

  • Paul.||

    You should not call yourselves libertarians. You should just be considered radical capitalists. You obviously cannot conceive of an aspect of freedom that isn't on corporate America's to-do list.

    Irony. You have stock in Netflix I take? Trying to guarantee your returns? Yeah, us radical capitalists love us some rent-seeking Netflix shit.

  • kbolino||

    You obviously cannot conceive of an aspect of freedom that isn't on corporate America's to-do list.

    The only way that "corporate America's to do list" can possibly include my freedoms is if there exists a government large enough to trample them. You cannot fight corporate control of the government (such as it is, anyway) with more government. You're just giving your enemies (if you see them that way) a bigger toolbox to work with!

  • Paul.||

    he only way that "corporate America's to do list" can possibly include my freedoms is if there exists a government large enough to trample them.

    I've yet to hear an adequate explanation of how Safeway can, for instance, take my property for the purposes of building a new store without Sheriff's deputies standing behind them.

  • ||

    And tony becomes a corporate shill for Netflix

  • Paul.||

    Translation: the end of net neutrality could hypothetically mean that streaming quality diminishes or that consumers must pay more to ensure that streaming bandwidth remains high.

    How dumb. Net Neutrality means that NO SERVICE PROVIDER CAN GUARANTEE NETFLIX QUALITY BY LAW. That means when you stream a movie and it can't lock into high def and I'm getting that crappy 320 x 200 I sometimes get on occasion when I stream my movies may become the fucking norm, and no provider can create a QOS service to guarantee quality for its subscribers at ANY SUBSCRIPTION COST.

    Grow up, Netflix.

  • ||

    Actually there is a back story to this.

    Netflix asked the cable companies to install some equipment into their systems that would reduce flicker of their movies. The cable companies said sure, but you pay for it.

    The irony is that net neutrality would prevent cable companies from legally installing that equipment because it would give priority to Netflix net traffic.

  • Paul.||

    Ed Zachary. Net Neutrality will kill off an entire future possibility of specialized internet providers that could create all kinds of tailored customer experiences. But every time this discussion pops up, it amazes me how many otherwise technically proficient people (I'm looking right the fuck at you, Slashdot) go full retard because they're pissed that their torrentz might be throttled.

  • Adam.||

    um, don't companies ALREADY charge for bandwidth? I know I pay for a tier of service. Net neutrality is about preventing an ISP from downgrading other content and prioritizing it's own. I'm against anything that allows the pipe to discriminate, taken to it's logical conclusion it's wholesale censorship.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Video Game Nation: How gaming is making America freer – and more fun.
  • Matt Welch: How the left turned against free speech.
  • Nothing Left to Cut? Congress can’t live within their means.
  • And much more.

SUBSCRIBE

advertisement