How to Save the Net: Don't Give In to Big ISPs

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.
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The next Netflix won’t stand a chance if the largest Internet service providers in the US are allowed to merge. The Heads Of State

The Internet has already changed how we live and work, and we're only just getting started. Who'd have thought even five years ago that people would be streaming Ultra HD 4K video over their home Internet connections?

Technological advances are driving this evolution and will continue to do so only if we make sure the companies controlling consumers' access to the Internet don't adopt business practices that stifle its revolutionary nature. 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.

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. 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.

It would be better to have no rules than the ones being proposed by the FCC, which simply legalize discrimination on the Internet.

Consider this: A single fiber-optic strand the diameter of a human hair can carry 101.7 terabits of data per second, enough to support nearly every Netflix subscriber watching content in HD at the same time. And while technology has improved and capacity has increased, costs have continued to decline. A few more shelves of equipment might be needed in the buildings that house interconnection points, but broadband itself is as limitless as its uses.

We'll never realize broadband's potential if large ISPs erect a pay-to-play system that charges both the sender and receiver for the same content. That's why we at Netflix are so vocal about the need for strong net neutrality, which for us means ISPs should enable equal access to content without favoring, impeding, or charging particular content providers. Those practices would stunt innovation and competition and hold back the broader development of the Internet and the economic benefits it brings.

Customers pay companies like AT&T, Comcast, and Verizon a monthly fee, and some are even financially penalized if they exceed usage caps. Charging us a separate fee ultimately means consumers pay twice—first for their broadband connection and second through higher-cost or lower-quality Internet services.

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It's worth noting that Netflix connects directly with hundreds of ISPs globally, and 99 percent of those agreements don't involve access fees. 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.

This is the reason we have opposed Comcast's proposed acquisition of Time Warner Cable. Comcast has already shown the ability to use its market position to require access fees, as evidenced by the Netflix congestion that cleared up as soon as we reached an agreement with them. A combined company that controls over half of US residential Internet connections would have even greater incentive to wield this power.

The Federal Communications Commission has historically focused only on last-mile connections—the final leg of the Internet that connects individual homes to the World Wide Web. Today's problem spots are further upstream, at the choke point where companies like Netflix pass our traffic off to the ISPs. If the FCC doesn't expand its purview to include these transactions, it would be better to have no rules than the ones being proposed—which simply legalize discrimination on the Internet.

Reed Hastings is the CEO of Netflix.

This article is part of our “Save the Net” series, featuring bold solutions to the biggest problems facing the Internet today.