In a post for Multichannel News, titled “In Netflix’s Version of Net Neutrality, It’s Entitled to Non-Neutral Treatment,” Todd Spangler breaks down Netflix’s new push for Internet providers to carry their high volume of traffic:
To Netflix, its Open Connect content delivery network program is an all-around win: By caching frequently accessed (and high bit rate) video in ISPs’ data centers, Netflix saves money on CDN costs; ISPs can cut upstream bandwidth utilization; and end users get a better streaming experience.
Netflix argues that this just makes the Internet better for everyone, and doesn’t cost ISPs a dime since Netflix is footing the bill to install the CDN caches anywhere the providers want.
But some ISPs are chafing at Netflix’s offer. Time Warner Cable has gone on record to complain that it’s unfair for Netflix to hold back “super HD” and 3D content unless a broadband provider plays ball and opens its doors for Netflix’s servers.
Spangler argues Netflix’s actions are anti-competitive, since the company is essentially demanding ISPs cut them a special deal. It also restricts content from certain consumers. As Fred Campbell of the Communications Liberty and Innovation Project (or CLIP), writes:
With its “Open Connect” model, Netflix is withholding content from the customers of ISPs that decline to accede to its demands. Though the details of its demands are unknown, it appears Netflix is requiring that ISPs “peer” with them or pay for the installation of Netflix equipment inside their networks as well as the ongoing costs of operating that equipment.
Like Spangler, Campbell also sees this as a move to reduce competition in the market, especially given Netflix’s increased clout through a recent deal it cut with major content providers:
Netflix recently announced a new multi-year licensing agreement that makes it the “exclusive American subscription TV service for first run live-action and animated features from the Walt Disney Studios.” In addition to Disney-branded content (e.g., The Lion King), the deal includes content produced by Pixar (e.g., Brave), Lucasfilm (e.g., Star Wars), and Marvel (e.g., The Avengers). Netflix also announced a multi-year deal with Turner Broadcasting and Warner Bros. that includes the Cartoon Network and exclusive distribution rights to TNT’s television series Dallas. As an analyst recently told Ars Technica, “These movies, if you’ve got young kids—you’ve got to have Netflix.”
Barring some sort of advanced technological breakthrough — say, content beamed directly into our heads — streaming video is the future of entertainment. That makes this latest maneuver by Netflix worth paying attention to. As Campbell points out:
Unfortunately, most consumers won’t realize that Netflix is trying to impose its costs on all Internet consumers to gain an anticompetitive price advantage against its over-the-top competitors.