Netflix, Inc. CEO Criticizes ISPs; Demands Strong Net Neutrality

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Netflix, Inc. (NASDAQ:NFLX) CEO Reed Hastings deeply criticized several Internet Service Providers (ISPs) in a blog post. He accused these Internet providers of jeopardizing Internet freedom. He said ISPs such as Verizon Communications Inc. (NYSE:VZ) and Comcast Corporation (NASDAQ:CMCSA) (NASDAQ:CMCSK) are violating the rules of net neutrality.

Netflix CEO demands stronger net neutrality

Netflix, Inc. (NASDAQ:NFLX) CEO urged consumers and regulators Thursday to fight for strong net neutrality rules. Net neutrality means the Internet service providers couldn’t limit access to applications or content based of their source. The rule states that the providers should not block or favor any specific content provided by a website. But the concept of net neutrality was clearly violated when Netflix was forced to pay a hefty sum to Comcast Corporation (NASDAQ:CMCSA) (NASDAQ:CMCSK) to stream its movies faster. Hastings said that such agreements shouldn’t even exist.

Hastings said Netflix, Inc. (NASDAQ:NFLX) has suffered due to weak net neutrality rules, which aren’t enough to safeguard a competitive and open Internet. Strong net neutrality would prevent Internet service providers from charging fees for interconnection to services like Netflix, Skype and YouTube. In February, many users of Verizon Communications Inc. (NYSE:VZ) and Comcast Corporation (NASDAQ:CMCSA) (NASDAQ:CMCSK) noted that Netflix streaming speed for them is slowing down. Soon, the Los Gatos-based company announced that it would sign a deal with these ISPs, and pay them for better connections. However, Hastings added that Netflix was a reluctant participant in the agreements.

Netflix is paying because it doesn’t want to hurt user experience

Hastings said that the ISPs extort this fee because they can. They have millions of customers, and they don’t mind compromising on service just so that they can force websites like Netflix, Inc. (NASDAQ:NFLX) to pay. The online streaming company is against the unfair demands by these ISPs, but it is willing to shell out money simply because it doesn’t want to hurt its customer experience.

In response to Hastings’ blog post, Comcast Corporation (NASDAQ:CMCSA) (NASDAQ:CMCSK) executive vice president said that Netflix, Inc. (NASDAQ:NFLX)’s claims are wrong and inaccurate. Large Internet service providers argue that Netflix generates a huge amount of online traffic, so it shouldn’t be surprised when ISPs demand more in return for their service.

Netflix, Inc. (NASDAQ:NFLX) shares rose 0.29% to $424.03 in pre-market trading Friday.

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About the Author

Vikas Shukla
Vikas Shukla has a strong interest in business, finance, and technology. He writes regularly on these topics. - He can be contacted by email at [email protected] and on Twitter @VikShukla10

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