Just hours after DISH Network Corp (NASDAQ:DISH) filed a Petition to Deny with the Federal Communication Commission, Netflix, Inc. (NASDAQ:NFLX) has joined them. As yesterday was the deadline for comments, presumably filed its 256-page document sometime before midnight but failed to announce it prior to today. Netflix is clearly worried about repercussions if the merger goes through and put off its filing until the last minute as it negotiates interconnection fees with larger ISPs.
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DISH’s concerns
DISH Network’s petition included much of the same language that Netflix used with DISH writing, “As companies such as DISH innovate and invest to meet the growing consumer appetite for broadband-reliant video products and services, this chokehold over the broadband pipe would stifle future video competition and innovation.” DISH believes that this would happen “all to the detriment of consumers.”
Netflix’s own petition stated that the merger, “would set up an ecosystem that calls into question what we to date have taken for granted: that a consumer who pays for connectivity to the Internet will be able to get the content she [or he] requests.”
Netflix’s Hastings speaks to interconnection fees
Netflix has reluctantly paid large ISPs in order to keep its streaming content coming at a speed that consumers have grown accustomed. But they clearly didn’t do it happily. Last week, Netflix CEO Reed Hastings wrote the following in WIRED.
“This year we reluctantly agreed to pay AT&T Inc. (NYSE:T), Comcast Corporation (NASDAQ:CMCSA), and Verizon Communications Inc. (NYSE:VZ) 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. The ISPs argue that our data-rich services take up limited capacity on their networks. But broadband is not a finite resource. Network limitations are largely the result of business decisions to not keep pace with subscriber demand in a world where the Internet increasingly is the main vehicle for all kinds of entertainment, from gaming to movies to video chats with loved ones.”
He then spoke to why larger ISPs are doing this, and the answer is simple.
“It is only a handful of the largest U.S. ISPs, which control the majority of consumer connections, demanding this toll. Why would more profitable, larger companies charge for connections and capacity that smaller companies provide for free? Because they can.”
It doesn’t come as a shock, by any means, that Netflix opposes the merger. The only question is why is it even being considered if the FCC is at all interested in consumer protection.
