Saturday, March 22, 2014

Netflix CEO Reed Hastings has posted a call for “strong net neutrality.”

In a post entitled Internet Tolls And The Case For Strong Net Neutrality, Netflix CEO Reed Hastings says that deteriorating customer experience fored him to agree to pay Comcast an interconnection fee. While that was a necessary short term step, he argues that, in the long run, such tolls would lead to escalating fees. Soon, every large ISP would be charging interconnection feesa toll, as depicted here:


Here are a couple of quotes from Hastings’ post:
For any given U.S. household, there is often only one or two choices for getting high-speed (10 Mbps) Internet access and that’s unlikely to change.

and

When an ISP sells a consumer a 10 or 50 megabits-per-second Internet package, the consumer should get that rate, no matter where the data is coming from.
As a consumer, I like the sound of that second quote -- I think that is what Hastings considers “strong net neutrality.” But, if the ISPs are not allowed to charge a “toll” for your traffic, won’t they pass their interconnect cost on to us consumers?

Isn't the monopoly market the real problem? If Netflix and others do not pay a fee to the ISP, won't they raise consumer prices?

What can be done to solve the real problem (for individuals and society) -- a lack of ISP competition?

Regulation or competition from local government-operated networks are two traditional answers and there are hopeful signs on both fronts. The FCC wants to formulate new rules with regard to net neutrality and is considering measures to overturn state laws restricting public broadband. Perhaps the citizens (voters) are getting fed up and the FCC is beginning to hear them -- is there a glimmer of light at the end of the tunnel?

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Update 9/24/2014

Netflix CEO Reed Hastings was on a panel at the Cable and Telecommunications Association for Marketing EuroSummit Conference in Copenhagen last week. Mike Fries, CEO of Liberty Global was a fellow panelist. Hastings "jokingly" offered Fries the following deal:
Consumers are choosing Netflix and if we’re supposed to pay some of the cost of the network, maybe we should get some of the broadband revenue ... we’ll pay 10% of your network costs if we get 10% of broadband revenue. Or we’ll pay 10% of your network costs if you want to pay 10% of our content costs.
Hastings also stated that
The crazy thing in this whole debate is the actual amount of money being talked about is trivial to both of us – but we’re both worried on both sides about the precedent and what does it mean in the longterm?