By Joshua Ostrer
Netflix and Google respond to overturned FCC regulation of internet
With net neutrality under fire, prominent online content providers like Netflix are fighting back. In response to a DC Circuit of Appeals decision handed down January 14 essentially striking down net neutrality in the U.S., video streaming giant, Netflix, is fighting back.
The January 14 verdict ruled in favor of Verizon in its case against the Federal Communications Commission (FCC).
The decision struck down ‘net neutrality’ provisions enforced by the FCC after the court admitted that the FCC had no legal ability to regulate Internet Service Providers (ISPs), like Verizon, in the same way it regulated phone companies.
What this ruling basically did is enable ISPs like Verizon to charge consumers different costs for different online services.
Whereas currently a Verizon customer pays the same amount for a consistent internet speed, let’s say 10 Mbps, regardless of if they are checking email or streaming a movie, companies like Verizon will now be able to charge extra depending on what exactly you’re doing with your bandwidth. This means users could see increases in their monthly bill because they watched Netflix instead of just checking email; something that could discourage users from visiting Netflix as often.
And Netflix, a website responsible for roughly 33% of all U.S. internet traffic, isn’t happy about the decision.
In a letter to stockholders, Netflix CEO Reed Hastings and CFO David Wells issued a statement regarding the ruling.
“Unfortunately, Verizon successfully challenged the U.S. net neutrality rules. 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.”
Netflix is taking an aggressive approach. But it seems as if the bandwidth-giant is in a place to do so given its 44 million subscribers and 1 billion hours watched of Netflix per month.
A boycott of a specific ISP by Netflix subscribers could hold enough potential of negative financial implications for the ISP to discourage it from hiking up bandwidth costs for services like Netflix.
However, the Netflix CEO and CFO made it clear they aren’t on a war-path. In their letter to stock holders, they emphasized the value that a respectful ISP-to-content-provider relationship could have on both sides.
“ISPs have very profitable broadband businesses they want to expand. Consumers purchase higher bandwidth packages mostly for one reason: high-quality streaming video.”
Netfix’s letter to stockholders seems to indicate that the company believes that a symbiotic relationship can exist between ISPs and content providers.
The letter to stockholders also emphasized how “many” ISPs are already working with high-quality streaming video services like Netflix to enable ISP customers “to more consistently get the high-quality streaming video consumers desire.”
It’s clear that Netflix is preparing itself for its future relationship with ISPs given the recent court ruling; however, this isn’t the first time Netflix has focused on the ISPs providing the site’s services to customers.
Netflix has delivered a monthly ISP ranking report each month since November 2012. In Netflix’s report, it ranks ISPs based on their ability to deliver video content, measured in Mbps. Google Fiber has held the top spot on Netflix’s ranking in every report since its inception, putting its streak at the top spot at 14 straight months.
Netflix’s monthly ISP rankings for the month of December 2013. Google Fiber has retained the fastest video streaming speed since Netflix began its monthly ISP ranking. [Photo Courtesy of Netflix]More information on Netflix’s ranking of your ISP in the present or dating back to November 2012 can be found at ispspeedindex.netflix.com.
Netflix is not the only internet giant concerned with the recent ruling. Google also opposed the ruling, given the massive amount of bandwidth used by its YouTube site.
YouTube ranks second only to Netflix in bandwidth usage, taking up 18% of all downstream American internet traffic in peak periods.
Just a week after the court ruling, Google announced that it will start ranking ISPs based on YouTube performance.
Google will rate an ISPs connection as one of the following:
- “YouTube HD Verified” (capable of 720p video with ‘quick’ load times)
- “Standard Definition” (capable of 360p with ‘moderate’ load times)
- “Lower Definition” (capable of less than 360p with buffering stops).
Google’s decision to take part in ISP ranking doesn’t do much on its own, but what both ranking systems do manage to accomplish is educating ISP customers as to precisely what they are paying for.
With ISPs under the watchful eye of consumers, content providers like Netflix and Google no doubt hope to discourage any increase in data costs for them or their millions of users.
At the end of federal net-neutrality regulations, with telecom giants like Verizon and AT&T on one side, internet content providers like Netflix and Google on the other, and millions of users in the balance, the future of net-neutrality has the potential to hold some widespread implications on the American internet industry, as well as the American public going forward.