Netflix Chief Reed Hastings Rages Against Internet Tolls, Makes Case For Net Neutrality
After reading through the latest rhetoric by Netflix CEO Reed Hastings, you get the feeling that he views his company's recent deal with Comcast as essentially sleeping with the enemy. The multi-year agreement ensures that Comcast subscribers will enjoy higher quality Netflix streams and less buffering, but Hastings warns that if left unchecked, ISPs will be free to charge increasingly higher interconnection fees to third-party services.
From the vantage point of where Hastings is sitting, these types of fees are nothing more than an "arbitrary tax" imposed by companies that are free to levy them because of their position in the market place. This puts companies like Netflix in an awkward position -- they can either take a stand and refuse to pay a higher rate, or give in to the ISP's demands so that streaming customers aren't the ones being punished.
"Netflix believes strong net neutrality is critical, but in the near term we will in cases pay the toll to the powerful ISPs to protect our consumer experience. When we do so, we don’t pay for priority access against competitors, just for interconnection," Hastings explained in a blog post. "A few weeks ago, we agreed to pay Comcast and our members are now getting a good experience again. Comcast has been an industry leader in supporting weak net neutrality, and we hope they’ll support strong net neutrality as well."
The counter-argument against Netflix is that its streaming service accounts for nearly a third of peak residential Internet traffic. With that being the case, ISPs believe it's only fair for Netflix to share in their costs.
"But they don't also offer for Netflix or similar services to share in the ISPs revenue, so cost-sharing makes no sense," Hastings added. "When an ISP sells a consumer a 10 or 50 megabits-per-second Internet package, the consumer should get that rate, no matter where the data is coming from."
Hastings is careful not to direct his feelings specifically at Comcast, though it's clear he isn't happy with the way things turned out. Towards the end of his blog post, Hastings laments that "Some big IPS are extracting a toll because they can," which probably sums up his feelings about the deal Netflix had to sign with Comcast.
From the vantage point of where Hastings is sitting, these types of fees are nothing more than an "arbitrary tax" imposed by companies that are free to levy them because of their position in the market place. This puts companies like Netflix in an awkward position -- they can either take a stand and refuse to pay a higher rate, or give in to the ISP's demands so that streaming customers aren't the ones being punished.
"Netflix believes strong net neutrality is critical, but in the near term we will in cases pay the toll to the powerful ISPs to protect our consumer experience. When we do so, we don’t pay for priority access against competitors, just for interconnection," Hastings explained in a blog post. "A few weeks ago, we agreed to pay Comcast and our members are now getting a good experience again. Comcast has been an industry leader in supporting weak net neutrality, and we hope they’ll support strong net neutrality as well."
The counter-argument against Netflix is that its streaming service accounts for nearly a third of peak residential Internet traffic. With that being the case, ISPs believe it's only fair for Netflix to share in their costs.
"But they don't also offer for Netflix or similar services to share in the ISPs revenue, so cost-sharing makes no sense," Hastings added. "When an ISP sells a consumer a 10 or 50 megabits-per-second Internet package, the consumer should get that rate, no matter where the data is coming from."
Hastings is careful not to direct his feelings specifically at Comcast, though it's clear he isn't happy with the way things turned out. Towards the end of his blog post, Hastings laments that "Some big IPS are extracting a toll because they can," which probably sums up his feelings about the deal Netflix had to sign with Comcast.
