Less than a month after Netflix CEO Reed Hastings made a deal with the ISP devil, Comcast, to pave the way for faster access to Netflix video streams for its customers, the outspoken leader got on his Netflix Blog soapbox to decry such deals, and make a strong plea for net neutrality.
While it’s easy to liken the deal Hastings struck with Comcast to feeding the lion at the door, it came at a time when Netflix, and the streaming video industry as a whole, was at an impasse. With seemingly no other choice than to watch its service flounder over Comcast pipelines, Netflix essentially agreed to a fealty tariff that would open the floodgates for its video streams – a move that bypasses third party connection services. The move was seen across the industry as a dangerous precedent, but with streaming speeds taking a nose dive in January, its hard to see any other pathway for Netflix to keep its services from folding altogether in some areas.
The conflict between Netflix and so called MSOs (Multi-system Operators) has been simmering for years, but the issue was pressed hard in January by a court decision in favor of Verizon, which shut down one of the FCC’s major avenues to secure net neutrality. Thanks to the decision, MSO’s were ostensibly granted permission to name their price for faster Internet speeds, arousing fears by consumer advocates that a pay-for-play scenario would arise, stifling innovation, and making it extremely difficult for smaller companies to compete on an even playing field.
Not surprisingly, shortly after Verizon’s victory, Netflix streaming speeds slowed to a snail’s pace on many ISPs, and there was even some compelling evidence that Verizon itself was intentionally throttling speeds to get Netflix to give in. Once Netflix agreed to the Comcast deal, there seems to have been enough blood in the water for Verizon to broker a similar deal, which is reportedly in the works.
With all of this in mind, Hastings took to the Internet airwaves yesterday with an inspiring call to arms, channeling his best William Wallace impression to garner support for what he sees as a dangerous fork in the road for the future of the information superhighway. What will you do without Net Neutrality?!
Among Hastings’ points were some telling bits of information to take away. First of all, we found out in a roundabout way approximately how much Netflix is paying Comcast in the new deal: “Roughly the same arbitrary tax,” the company was already paying third party companies like Cogent and Level 3 to connect to Comcast’s pipelines. While chastising Comcast and others, Hastings also gave kudos to cable companies who are doing it right, such as Cablevision, which he praised for practicing “strong net neutrality.”
Perhaps more to the point at hand, however, was the fact that, in his mind, the Verizon courtroom victory wasn’t all that detrimental to net neutrality in the first place. In fact, Hastings implied that neutrality was already in peril before the decision, and in need of much stronger FCC guidelines to keep things even for the little guy. Finally, Hastings made the point that Netflix’s agreement to pay Comcast had nothing to do with trying to get a jump on other services in the growing streaming marketplace. Painting Netflix as the all-for-one hero in the grand fight, Hastings said of of paying for faster connection, “When we do so, we don’t pay for priority against competition, just for interconnection.”
Whether or not you take the CEO of the biggest streaming video site in the land at his word, the point is clear: Hastings made his deal knowing full well that it could cause an escalation in prices over time, and a precedent that would send the other sharks, such as Verizon, circling. However, he maintains there was no choice, other than to watch his customer base suffer, and possibly dwindle in the face of stifling connection speeds.
Whatever your feelings on the issue, it’s clear that MSOs have never been more powerful. And with Comcast – already the the nation’s biggest ISP – looking to lock down the second biggest in a deal to purchase Time Warner Cable for its very own, it seems something needs to be done to keep the Internet from turning into yet another playground for the super rich to do as they please.
As the FCC works on a new deal to keep net neutrality viable, Netflix looks to be fighting the good fight. Let’s hope someone wielding the sceptre wants to listen.
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