Saturday, January 25, 2014

Netflix: "Unfortunately, Verizon successfully challenged the U.S. net neutrality rules"

In the 2013 annual report to its shareholders (here), Netflix challenges the recent ruling on Net Neutrality (if nothing else works, "more regulation would clearly be requires").

Netflix believes that ISPs will not discriminate Netflix subscribers - and will actually work together with them on improving QoE (in order to go up in Netflix ISP chart? - see "Netflix CDN Customers have More Fun" - here).

Netflix also suffers from another aspect of Net Neutrality data caps (see "Netflix CEO: "Comcast no longer following net neutrality principles"" - here).

"Unfortunately, Verizon successfully challenged the U.S. net neutrality rules. In principle, a domestic ISP now can legally impede the video streams that members request from Netflix, degrading the experience we jointly provide. The motivation could be to get Netflix to pay fees [see "FCC Chairman re-defines Net Neutrality: "we're going to see a two-sided world"" - hereto stop this degradation. 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.

The most likely case, however, is that ISPs will avoid this consumer-unfriendly path of discrimination.
ISPs are generally aware of the broad public support for net neutrality and don’t want to galvanize
government action.

Moreover, ISPs have very profitable broadband businesses they want to expand. Consumers purchase higher bandwidth packages mostly for one reason: high-quality streaming video. ISPs appear to recognize this and many of them are working closely with us and other streaming video services to enable the ISPs subscribers to more consistently get the high-quality streaming video consumers desire. 

In the long-term, we think Netflix and consumers are best served by strong network neutrality across all networks, including wireless. To the degree that ISPs adhere to a meaningful voluntary code of conduct, less regulation is warranted. To the degree that some aggressive ISPs start impeding specific data flows, more regulation would clearly be needed

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