Netflix Threatens To Rally User Base To Rise Up And Save Net Neutrality

Over the past few weeks, net neutrality has seen serious challenges from the likes of Verizon and AT&T. Verizon won a court case in which the FCC's rules on net neutrality were effectively gutted, while AT&T introduced a new pricing plan for content providers called Sponsored Data, which pushes companies like Netflix to pay an additional per-user fee to have video streams not count against that users' bandwidth. Everyone has been curious about how Netflix might respond to this, and now the company's CEO has tendered his answer in a letter to shareholders.

CEO Reed Hastings has challenged the decision to strike down net neutrality in strong terms, writing:
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 to 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...

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.
During the company's Q&A session yesterday, Hastings played down this statement, emphasizing that Netflix didn't see other carriers choosing to go down this road, but this may have been a calculated move to appear friendly to other companies. As AT&T's Sponsored Data shows, bandwidth providers are already very interested in a system that allows them to charge more for providing the same level of service.

As recent actions have shown, its customers that suffer when the agreements between ISPs and content providers break down. When CBS and Time Warner were fighting over carriage fees last summer, it was TWC subscribers who couldn't watch the content they paid for. No refunds were ever provided or offered. Netflix, with its 33 million domestic subscribers, has a reach and pull that it could easily leverage to blast ISPs that choose to degrade its video stream capability.

Verizon didn't campaign for years against net neutrality not to go on the offensive as far as turning the screws on consumers. Netflix is virtually the only company, besides Google and YouTube, that could conceivably mount an offense against the behavior. The uproar over SOPA years back may have demonstrated that he Internet is capable of waking up and roaring, but the net neutrality situation more closely resembles a frog in a pot -- cranking up the temperature one degree at a time, so as not to alarm the consumers.