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Netflix Speaks Out On Net Neutrality

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NETFLIX NET NEUTRALITY
The Netflix company logo is seen at Netflix headquarters in Los Gatos, CA on Wednesday, April 13, 2011. AFP PHOTO / Ryan Anson (Photo credit should read Ryan Anson/AFP/Getty Images) | AFP via Getty Images

After a week of silence, Netflix finally spoke up on the issue of net neutrality during on earnings call on Wednesday.

While calling the end of net neutrality a possible "draconian scenario," Netflix is hopeful public pressure will prevent Internet service providers from charging either customers or companies more of streaming video.

But if Verizon and its ilk do begin to discriminate between different types of Internet traffic, government regulation will be needed, Netflix said.

"Unfortunately, Verizon successfully challenged the U.S. net neutrality rules," the company said in a statement. "In principle, a domestic ISP now can legally impede the video streams that members request from Netflix, degrading the experience we jointly provide."

Last week, a U.S. appeals court struck down FCC rules that forced Internet providers to be "net neutral," which compelled them to treat all types of Internet traffic equally. If net neutrality were to end, Internet providers like Verizon may force people to pay different amounts based on which sites they frequent, and Netflix would likely be quite expensive. Some have suggested that Netflix would be forced to pay tolls, as the website takes up 32 percent of North America's peak Internet traffic.

Previously, David Hyman, general counsel of Netflix, recommended that no one be billed for bandwidth based on how much is used. Bandwidth, Hyman explained, is neither expensive nor scarce, and companies like AT&T who overcharge customers are doing people a disservice.

Here is Netflix's official statement:

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.

The most likely case, however, is that ISPs will avoid this consumer-unfriendly path of discrimination. ISPs are generally aware of the broad public support for net neutrality and don’t want to galvanize government action.

Moreover, ISPs have very profitable broadband businesses they want to expand. Consumers purchase higher bandwidth packages mostly for one reason: high-quality streaming video. ISPs appear to recognize this and many of them are working closely with us and other streaming video services to enable the ISPs subscribers to more consistently get the high-quality streaming video consumers desire.

In the long-term, we think Netflix and consumers are best served by strong network neutrality across all networks, including wireless. To the degree 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.

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