The Brilliance of Netflix’s puppeteering on Network Neutrality: But does it want what it won?
Something weird happened last week.
The Chief Financial Officer over at Netflix, the same company that led the charge for Network Neutrality told a room at an industry conference in Australia that his company really didn’t want the Federal Communications Commission to regulate the internet.
Say what now?
CFO David Wells essentially confessed that the only reason it pushed hard for Title II regulation was to promote its selfish commercial interest. Netflix only wanted government intervention after some ISPs were requiring it to pay for delivery of its massive swatch of content to customers.
Indeed, this is the same company fighting for ISPs to not impose any unreasonable limits on broadband traffic. Yet Netflix just struck a deal that would exempt it specifically from data caps. What happened to champion the rights of everyone?! Hrmph!! (http://www.theverge.com/2015/3/3/8142899/netflix-net-neutrality-flipfl)
Talk about promoting self interest!
Not really. This is purposeful, strategic and brilliant! It is all about using what you got: clout, brand loyalty (everyone loves “House of Card“) and a very confused pop culture market that loves a good slogan and will quickly rally in a fight for the little guy ! Rah! Rah! ( “Internet …Start Ups…Neutrality!”)
(See this summation in Forbes: http://www.forbes.com/sites/larrydownes/2014/11/25/how-netflix-poisoned-the-net-neutrality-debate/)
Only Netflix isn’t quite little and neither its co-conspirator parties in this game.
For example, a week after helping Netflix win Title II at the FCC, Etsy, for example announced it is seeking a $100M IPO. [Um…so that whole thing about going under and taking all these stay-at-home mom crafters was, what?, a big lie]
It all just seems like we’ve been duped no?
(At least this Opinion writer at Wired thinks so: http://www.wired.com/2015/03/fcc-better-call-saul/)
Here are some things to consider:
The concept of government take over of the Internet to ensure nothing bad happens in the future is not new and has been championed for many many years, but it all just gained sea legs in the past 5 years or so.
In 2010, Netflix got into a dispute over peering agreement it had with Comcast.
I was among many who figured out that one way Netflix could get better terms or diminish the power of internet backbone providers is to get the FCC to get involved and force their hand some.
Their plan is genius, if you think about it: Get the FCC involved. Get it to stop the ISPs from leveraging so much power. Slow them down. Get influential allies that control content creators like the Hosting companies and Tumblr to force their members to send off letters to Congress or the FCC in order to be able to log in to their account. Then, use the numbers of these unwilling petitions under duress to make your claim that millions of Americans want this (as if they understand what “this” is)
Make the ISPs the enemy or even more of the enemy than they already are considered.Use influential consumer advocacy organizations to lead the charge. (oh and have them accuse minority organizations with different priorities as being sell-outs. That’s a good one)
It all was just in time too!
By 2011, a study of broadband traffic determined that Netflix took Up 32.7% of Internet Bandwidth. Sandvine Intelligent Broadband Networks report analyzing 200 Internet service providers in 80 countries found that real-time entertainment apps account for 60% of peak downstream traffic, up from 50% the previous year.
It also found that Netflix has more than half of that share, with the peak hours for the traffic being between 6 p.m. to 10 p.m., when people are home and watching series and movies off the net.
Before the catch phrase “Network Neutrality” caught on to help a company force the FCC to help it gain leverage over contract opponents, there really was no need for it because there was/is so much diversity in content and the traffic that is delivered to residential customers via ISPs. If they were to degrade the quality of some over others, customer backlash could come in the form of them severing their contract and going with another service.
Indeed, in recent years, cord-cutting has been a thing because the diversity in the video content delivery market has been so robust.
Now that the FCC has been convinced to adopt a heavy-handed regulatory approach, those involved are realizing quickly they may have been mistaken.
Even though the FCC has promised not to regulate interconnection agreements, truly ensuring parity would require that otherwise. That’s why the industry is skeptical.
As tech journo Jonathan Lee wrote in a Washington Post article about a Comcast–Netflix peering deal last year:
“But in a world where Netflix and Yahoo connect directly to residential ISPs, every Internet company will have its own separate pipe. And policing whether different pipes are equally good is a much harder problem than requiring that all of the traffic in a single pipe be treated the same. If it wanted to ensure a level playing field, the FCC would be forced to become intimately involved in interconnection disputes, overseeing who Verizon interconnects with, how fast the connections are and how much they can charge to do it.”
Yup! There you have it.
And the thing with the way the internet goes, a strong gale wind could cause someone’s connection to degrade some. Now, with Network Neutrality on the books as a win, the FCC can prepare to become the recipient of complaints over the 101 different reasons for less-than-perfect service — all reasons that won’t necessarily be because of net neutrality violations.
I can’t help but recall this SNL skit from a few weeks ago that sums up pretty well what Americans feel about this campaign of confusion:
Here we go…..