Netflix has issued an official statement condemning the repeal of Net neutrality protections.
U.S. officials have always struggled to decide just how the Internet should be regulated. A defining moment was in 2015, when the Obama administration classified the Internet as an essential utility. That meant it fell under the jurisdiction of the F.C.C., and could be regulated by them. Crucially, the F.C.C. established principles of Net neutrality — that Internet Service Providers (ISPs) should treat all online content equally.
The Trump administration has chosen to reverse that decision. The principle of Net neutrality will no longer be enshrined in law, freeing up ISPs to discriminate against competitors. Some companies support this decision, and others oppose it. Netflix, for example, is not impressed. They've issued an official statement on Twitter.
We’re disappointed in the decision to gut #NetNeutrality protections that ushered in an unprecedented era of innovation, creativity & civic engagement. This is the beginning of a longer legal battle. Netflix stands w/ innovators, large & small, to oppose this misguided FCC order.— Netflix US (@netflix) December 14, 2017
Netflix has always been a major player in this particular debate. Back in 2014, CEO Reed Hastings made a high-profile intervention in a company blog. He argued for strong regulations, and deliberately linked Net neutrality to a connectivity dispute between the streaming service and Comcast. In July of that year, Netflix submitted filings to the F.C.C. to support Net neutrality.
The decision to revoke the Obama-era regulations is a controversial one. There are two major concerns; the first is that some ISPs will choose to discriminate against their rivals. The second is that ISPs could begin to offer packages to customers, encouraging them to choose what type of content they prefer to use. It's an approach already used in Portugal, where customers can choose packages centered around social media, messaging, music, or video. If they want their Netflix shows to load quickly, and in high-quality, then they have to choose the right package — or pay a top-up. Netflix is concerned that this could have a direct impact on how attractive and competitive their own streaming service is.
The issue becomes even more problematic when you take into account a recent academic study conducted by researchers from Economists Incorporated. This suggested that nearly 50 million U.S. households currently have access to only one ISP providing download speeds of 25Mbps+, or none at all. Many customers will be unable to switch providers if ISPs do start changing the download speed for Netflix, or offering packages.
Supporters of the repeal tend to be believers in light-touch regulations. They argue that the repeal allows ISPs to choose different approaches to the service they provide. If they're right, this could actually boost competitiveness between the different ISPs. Ultimately, it's too soon to tell what impact the F.C.C.'s decision will have. No company has stated they intend to package the Internet at this point, and there are clearly going to be legal disputes over the issue. As with so many political decisions, only time will tell how this plays out.