In a recent opinion piece published in Wired Magazine, Reed Hastings, Netflix chief executive officer and one of the largest users of internet broadband capacity in the world, argued that in order to “save the net” society should not “give in to the big ISPs.” One day later, Techspot published a report that Netflix, Inc. (NASDAQ:NFLX) is agreeing to pay Time Warner Cable Inc (NYSE:TWC) an additional fee to receive faster download speeds.
In giving in to Time Warner, Hastings appears to be violating a core tenant of “net neutrality,” a guiding concept that mandates all internet traffic be given equal treatment.
Netflix deal with Time Warner Cable
The deal with Time Warner marks the fourth such deal the firm has signed, following agreements with internet controllers Comcast Corporation (NASDAQ:CMCSA), Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T). Press reports reviewed by ValueWalk did not reveal financial terms of the agreement or determine if they were consistent across ISPs.
Netflix represents nearly one-third of all downstream internet traffic in North America as it emerges as a primary competition for megalithic cable firms, which primarily control access to the Internet.
Cable TV marketers Time Warner, Comcast and AT&T along with telecommunications giant Verizon, represent 68 percent of all high speed internet subscribers. These firms, many with a pre-disposed bias to limit the growth alternative internet mass communication channels, have heavily lobbied the US government for the ability to provide a special “fast lane” for companies that pay for this privilege.
Cable companies limiting Netflix access to extort financial payments
The extent to which they will go to enforce this virtual monopoly is clear. The cable companies used the intimidation of limiting Netflix access in order to extort financial payments.
“This year we reluctantly agreed to pay AT&T, Comcast, and Verizon for access to our mutual subscribers, who were seeing a rapid decline in their Netflix viewing experience because of congestion at the connection point where we transfer content to the ISP,” Hastings wrote in the Wired piece.
Hastings has been one of the leaders in fighting the control of the cable concerns in limiting access to diverse content on the internet. In the Wired article, the Netflix CEO said the internet service provider’s “pay for play” system will undermine the internet’s true potential.
He has also been staunchly opposed to the pending Comcast acquisition of Time Warner, which would further consolidate power among those who currently maintain control a large portion of mass communication in North America. “The next Netflix won’t stand a chance if the largest US Internet service providers are allowed to merge or demand extra fees from content companies trying to reach their subscribers,” he wrote.
Hastings argues network limitations are a business strategy
While the dominate ISPs argue Netflix is taking up “limited” broadband space, Hastings notes “broadband is not a finite resource. Network limitations are largely the result of business decisions to not keep pace with subscriber demand…”
For its part, the Federal Communications Commission is reported to be looking into the agreements. But with powerful establishment media forces battling to maintain their control over mass communication, don’t expect a changes to the elite control system without a fight.