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Netflix wades in on net neutrality row

Celebrates 44 million subscribers and says it won't be bullied by ISPs
Thu Jan 23 2014, 12:32

TV AND MOVIE STREAMING SERVICE Netflix has shown its hand in the ongoing net neutrality debate.

Basking the glow of its latest results showing it now has 44 million subscribers, an increase of 14 percent year on year, the company's quarterly letter to shareholders (pdf) explained its position following the recent US federal appeals court decision overturning the US Federal Communications Commission (FCC) regulations that prohibit Verizon and other internet service providers (ISPs) from shaping and prioritising internet traffic.

The letter read, "In the long-term, we think Netflix and consumers are best served by strong network neutrality across all networks, including wireless. To the degreee that ISPs adhere to a meaningful voluntary code of conduct, less regulation is warranted. To the degree that some aggressive ISPs start impeding specific data flows, more regulation would clearly be needed."

It went on to explain that the company will not be bullied into buying extra bandwidth to avoid signal degradation, saying, "Were this draconian scenarion 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."

Streaming services potentially could benefit from the court's ruling, however Netflix's statement on the matter is refreshingly different. Although Netflix stops short of specifying what action it might take, it is clear that it does not wish to risk its business model, which might force it to raise prices or risk not being able to deliver the 4K services it promised for 2014.

However, this has not stopped Netflix from floating proposals for a tiered service of its own. There has been speculation that Netflix and its rivals might introduce different rate structures for the number of concurrent devices, HD and other premium services in the future, and this letter seems to confirm that prospect.

"Last April we introduced a [four]-concurrent stream $11.99 option to begin our evaluation of plan tiering. Since late last year, we have also been testing [one]-stream and [three]-stream variants, as well as SD/HD variations, at various price points.

"Eventually, we hope to be able to offer new members a selection of three simple options to fit everyone's taste."

Netflix has not mentioned a timescale for introducing such changes. Its letter to shareholders is an open internal document, and should not be considered proof of an impending change of tack, at least for the moment. µ


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