After the court struck down the FCC’s net neutrality proposal, Netflix, Inc. (NASDAQ:NFLX) customers were concerned about possible price hikes.
Trouble for Netflix?
Much of the information surrounding the net neutrality controversy is hard to understand, but the good news is it’s unlikely to affect your Netflix bill anytime soon. If and when it does go up in price, net neutrality won’t be the reason. How this decision affects the internet and internet based services is a bit complex. Although the fact that the Federal Communications Commissions has jurisdiction to regulate broadband access was upheld, the US Court of Appeals asked about the key facet regarding FCC’s authority over broadband companies.
The 2-to-1 ruling paved the way for significant changes in internet businesses. One possible change could give internet service providers the power to charge internet content companies like Netflix, Inc. (NASDAQ:NFLX), Hulu, YouTube, or Amazon fees. Another possibility is to charge fees for priority status which would prevent streaming from buffering during peak hours.
That is the main concern for Netflix, Inc. (NASDAQ:NFLX) users: that if the company is presented with price hikes, the price will be passed on to the customer. In all honesty, Netflix, Inc. (NASDAQ:NFLX) is and should be the primary target considering streaming video services account for most of peak internet traffic. In fact, it accounts for almost one-third of all downstream traffic during the peak period in North America.
Netflix users shouldn’t worry yet
If ISPs decide to add a fee per gigabyte transmitted, Netflix, Inc. (NASDAQ:NFLX) would lose the most. Fortunately, it doesn’t appear that the popular movie streaming service has anything to worry about, at least right now. CNET explained, “For one thing, ISPs would be venturing into territory their subscribers would decry. Netflix, Inc. (NASDAQ:NFLX) is likely to doggedly resist setting any precedent of paying for access to networks. When an ISP gives Netflix, Inc. (NASDAQ:NFLX) the option of paying up or dealing with slower speeds, and Netflix refuses, the ISP will be penalizing its own customers with poorer service for the very thing that got so many of them to sign up for broadband in the first place.”
It’s also noted that the court didn’t drop disclosure requirements which ISPs would have to share which websites/services would be throttled.