TECH
04/24/2014 05:35 pm ET | Updated Apr 25, 2014

Your Netflix Bill Could Go Up Even More. Blame The Government

Netflix made clear earlier this week that by the end of June, the streaming company will raise prices by $1 or $2 per month.

But if new rules proposed by the FCC go into effect, that increase could be just be the beginning.

FCC Chairman Tom Wheeler circulated new rules to his fellow commissioners Thursday related to "net neutrality," or the idea that all web traffic should be treated equally. The rules would allow Internet service providers, like Verizon, AT&T and Time Warner Cable, to charge companies for faster delivery of content to their customers.

Consumer advocates say that companies like Netflix, among others, may have to pay in order to keep up with the competition and make sure their customers can binge-watch reliably. An official from the FCC said on a call with reporters Thursday that the agency will review these prioritization deals on a case-by-case basis to make sure they're "commercially reasonable."

Netflix isn't happy about the proposal.

"The proposed approach is the fastest lane to punish consumers and Internet innovators," Netflix said in a statement to The Huffington Post.

The streaming giant has been outspoken in favor of stronger net neutrality rules. Days after the U.S. Court of Appeals struck down the open Internet order in January, which is why the FCC needs come up with the new rules, Netflix executives warned of a "draconian scenario" in which an Internet provider could "legally impede the video streams that members request from Netflix, degrading the experience we jointly provide."

"In the long-term, we think Netflix and consumers are best served by strong network neutrality across all networks, including wireless," Netflix wrote in a letter to shareholders.

Consumer advocates also warned of higher Netflix prices down the road.

"If Netflix wants its content to work and to be appealing to customers, more appealing than the content that the cable company or ISP are offering themselves, then they're going to have to pay," said Derek Turner, a research director at Free Press, a nonpartisan advocacy group. "And their margins are quite thin, and that means they're going to have to pass those costs along to their consumers."

Netflix, which sends huge amounts of data across networks, relies on fast and reliable connections so its customers can binge-watch "House of Cards" in HD. Netflix is a data hog -- at peak times, it accounts for nearly a third of traffic being delivered to homes in the U.S., according to Sandvine, a company that makes broadband network equipment.

In February, Netflix reluctantly agreed to pay Comcast for direct access to its network. Netflix speeds had been declining on Comcast's networks for months due to congestion, and the two companies had been in a standoff as to which one should shoulder the costs to upgrade the network.

A month after Netflix made the deal, Reed Hastings, the company's co-founder and CEO, said the FCC should establish stronger rules that would extend to this web infrastructure.

The new rules will not do that, a senior FCC official confirmed Thursday.

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