Netflix warns ISPs against 'draconian' response after net neutrality ruling
The company said it would vigorously protest higher fees
By Zach Miners | Published: 01:01, 23 January 2014
Netflix has a message for ISPs that might be thinking about charging more to carry its video service in the wake of last week's net neutrality ruling: Do so at your own risk.
A U.S. appeals court struck down the net neutrality rules, effectively enabling broadband providers to selectively block or slow traffic on their networks if they think they have cause.
In principle, an ISP (Internet service provider) could now degrade the quality of Netflix's streaming service unless the company paid an additional fee to the ISP, CEO Reed Hastings said in a letter to shareholders Wednesday.
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That, he suggested, would be unwise.
"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," Hastings said in the letter, which accompanied its quarterly earnings report.
Hastings provided additional comments on the company's earnings call.
"If ISPs, especially major ISPs, were to contemplate blocking Netflix or other services, it would significantly fuel the fire for more regulation, which is not something they're interested in," he said.
Netflix said it thinks most ISPs will choose to avoid a potential consumer backlash.
"ISPs are generally aware of the broad public support for net neutrality and don't want to galvanize government action," Hastings said in the letter, cosigned by Netflix's CFO.
The company's interests are aligned with those of service providers, Hastings said: to provide customers with high-quality streaming video. But while he doesn't expect Netflix to see any impact in the short term from last week's ruling, "in the long term we still need to figure out what it means and how that works out," he said.
The FCC's net neutrality rules, also called the open Internet rules, were passed in 2010. Verizon challenged them, arguing that the agency was not authorized by Congress to regulate broadband providers.
Other Internet firms have said little publicly about how last week's ruling might affect them. The Internet Association, which represents Netflix, Google and others, said innovation stems from the Internet's "decentralized, open architecture."
"The Internet Association supports enforceable rules that ensure an open Internet, free from government control or discriminatory, anticompetitive actions by gatekeepers," it said. It said it was studying the appeals court's opinion.
In its earnings announcement, Netflix reported total sales of US$1.18 billion for the three months ended Dec. 31, up 24 percent from the same quarter in 2012. Net income was about $48 million, a more than six-fold increase from the same quarter a year earlier.