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The CEO Of Netflix Is Not Happy About Their Deal With Comcast

By 03.24.14

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You’ll recall that a few weeks ago, Comcast entered into an agreement to purchase Time Warner, combining the nation’s largest cable provider with the nation’s second largest cable provider, assuming the FCC ultimately approves. The deal, obviously, was less about cable television, and more about broadband. The newly formed company will control 30 percent of the nation’s broadband market, and that means, Comcast owns 30 percent of the nation’s access to the Internet. The catch? Comcast employs caps, which means broadband subscribers will have to pay more to gain more Internet access.

That gets tricky where it concerns those who consume most of their media on the Internet, or specifically Netflix. Because there are currently no strong net neutrality laws in place, Comcast could — if it wanted to — disrupt access to Netflix. A week or so after the merger was announced, Netflix saw the writing on the wall and cut a deal with Comcast to ensure that Comcast subscribers would get all the broadband they needed to stream Netflix programming.

That doesn’t mean that Netflix is happy about it. Specifically, Netflix CEO Reed Hastings firmly believes that net neutrality must be strengthened and defended to prevent ISPs like Comcast from disrupting access to Netflix or even worse, smaller start-ups that can’t afford to pay Comcast to grant uninterrupted access.

Here’s what Reed Hastings had to say on the Netflix blog:

Once Netflix agrees to pay the ISP interconnection fees, however, sufficient capacity is made available and high quality service for consumers is restored. If this kind of leverage is effective against Netflix, which is pretty large, imagine the plight of smaller services today and in the future. Roughly the same arbitrary tax is demanded from the intermediaries such as Cogent and Level 3, who supply millions of websites with connectivity, leading to a poor consumer experience.

Without strong net neutrality, big ISPs can demand potentially escalating fees for the interconnection required to deliver high quality service. The big ISPs can make these demands — driving up costs and prices for everyone else — because of their market position. For any given U.S. household, there is often only one or two choices for getting high-speed Internet* access and that’s unlikely to change. Furthermore, Internet access is often bundled with other services making it challenging to switch ISPs. It is this lack of consumer choice that leads to the need for strong net neutrality.

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. 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.

He doesn’t come right out and say it, but the subtext is clear: Reed Hastings is not happy about getting the shakedown from Comcast, and it’s his hope that Comcast — and other Internet providers — do not continue this trend because it’s bad for other streaming services, it’s bad for Netflix, and it’s bad for consumers. The only winner here is Comcast and their shareholders, unless there’s stronger competition from other ISPs with stronger net neutrality stances.

The problem is, most Internet consumers don’t understand this. If they see a spinning wheel or a frozen hourglass on their screen, they’re more likely to blame Netflix or HBO Go or Amazon Prime, rather than their ISP. What streaming services need to do, of course, is to make subscribers more aware of where the problem lies. Instead of a spinning wheel, they should include this message: “We apologize for the excessive buffering, but don’t blame us. Blame your sh*tty Internet Service Provider.”

At least that will put the pressure where it belongs.

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Source: Netflix


TOPICS#NETFLIX
TAGSCOMCASTispstime warner

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