FCC to Netflix: Be Prepared to Pay Internet "Toll Fees" to More ISPs
April 1, 2014 1:34 PM
The FCC won't allow net neutrality to regulate the way companies like Netflix connect to the Internet
Netflix was hoping for an end to internet tolls by calling to expand the scope of net neutrality, but the Federal Communications Commission (FCC) isn't having any of it.
, the FCC denied Netflix's call to expand net neutrality so that it covered companies and their methods of connecting to the internet.
More specifically, Netflix CEO Reed Hastings wanted the FCC to regulate the way companies like Netflix connect to the internet so that they wouldn't have to pay tolls to other companies (like Comcast, for example) to make sure its video gets to customers quickly and without any issues.
"Peering and interconnection are not under consideration in the Open Internet proceeding, but we are monitoring the issues involved to see if any action is needed in any other context," said an FCC spokesperson.
Netflix agreed last month to
to ensure that its movies and TV shows stream easily without traffic jams on Comcast's broadband network. While it's not clear how much Netflix is paying Comcast, the new deal will span several years and Comcast said it would connect to Netflix's servers at data centers operated by other companies.
But Netflix wanted this to be a one-time deal until it managed to push laws in place that eliminated these tolls.
Having to pay Comcast means Netflix could end up having to
pay tolls to other providers
like Verizon and AT&T -- and there's no way these tolls come cheap. The streaming company already pays high prices for content licensing from content providers, and having this extra fee on the table (and potentially from many big cable companies) would really put a damper on Netflix's cash flow.
"Some big [Internet service providers] are extracting a toll because they can—they effectively control access to millions of consumers and are willing to sacrifice the interests of their own customers to press Netflix and others to pay," said Hastings.
"If this kind of leverage is effective against Netflix, which is pretty large, imagine the plight of smaller services today and in the future."
Big cable got even bigger this year when
Comcast acquired Time Warner Cable
(TWC) in February for $45.2 billion USD. Comcast has about 25 percent share of the broadband market while TWC controls around 12 percent. As far as the subscription cable TV market goes, Comcast currently controls roughly 19 percent and TWC controls around 9 percent. Together, the pair would control about a third of the markets (37 percent of broadband; 28 percent of cable TV).
"And boy have we patented it!" -- Steve Jobs, Macworld 2007
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