Network News

X My Profile
View More Activity
Posted at 3:30 PM ET, 01/27/2011

Netflix CEO wades into net neutrality debates

By Cecilia Kang


Netflix, the DVD mail-order-company-turned-online-video-giant, is firing back at cable and telecom firms as it weighs in on an increasingly thorny debate over net neutrality.

In a blog Thursday, Netflix published a ranking of how Internet service providers perform in delivering Netflix's online streaming videos. Chartered gets highest marks for delivering videos at high speeds, therefore better resolution. Clearwire is ranked last in the United States (of course, Clearwire is a wireless firm, which isn't exactly an apples to apple comparison). Time Warner Cable, Comcast and Cox rank high.

And after reporting strong fourth-quarter earnings, Netflix CEO Reed Hastings said in a letter to shareholders that the practice by Internet service providers such as Comcast of charging networking firms such as Level 3 more to bring videos and other content to users is "inappropriate.

He didn't mention those firms by name, but his comments were clearly directed at the ongonig salvo between Comcast and Level 3 over charges to deliver traffic to Comcast customers. Level 3 is one of Netflix's partners that deliver online videos to different networks.

Why does this matter? Because it's the most aggressive move yet by Netflix to address a months-long net neutrality debate between Level 3 and ISPs such as Comcast, AT&T and Verizon Communications. Netflix has become the pin cushion of the media and cable industry, seen as a threat to traditional business models for its fast acquisition of online customers who could choose to supplant their cable subscriptions for online video.

Level 3 has filed numerous letters with the FCC, saying Comcast's decision last November to raise prices for traffic exchange appears to violate net neutrality rules. The agency hasn't specifically address how so-called middle mile practices are covered by the rules. Republican members Meredith Attwell Baker and Robert McDowell have warned against regulation of backhaul networks, which would include traffic exchange deals between Level 3 and Comcast.

On Wednesday night, Netflix CEO Reed Hastings waded into the debate for the first time, writing in a letter to shareholders that it is "inappropriate" for ISPs to charge more for traffic to reach customers. Hastings said that even if 20 percent of all peak bandwidth is used by Netflix streaming video, the firm is paying for its traffic to reach ISPs who then deliver traffic to homes. Cable and telecom firms are using their exclusive access to customers to unfairly charge networking partners more, the firms said.

"Little of this traffic goes over the Internet or ISP backbone networks, thereby minimizing ISP costs, avoiding congestion, and improving performance for end-using consumers," Hastings said in the note to shareholders.

And Hastings warned against usage caps by cable and telecom firms -- a practice that was blessed by the Federal Communications Commission in its December net neutrality order. Analysts say that by charging by the gigabyte, consumers may curb how much video they watch online, which would hurt companies such as Netflix and

Related stories:
Net neutrality complaints pile up

Level 3 accuses Comcast of unfairly using clout to charge more

By Cecilia Kang  | January 27, 2011; 3:30 PM ET
Categories:  Comcast, Early Termination Fees, Internet TV, Net Neutrality, Online Video  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: Five Anonymous hacker suspects arrested in Britain, police say
Next: White House moves to give airwaves to public safety for emergency wireless network


I hope the GOP members of the FCC listen to Mr. Hastings. This isn't just about what's good for AT&T or Comcast, it's about increasing U.S. competitiveness and innovation capabilities.

Posted by: valkayec | January 27, 2011 4:22 PM | Report abuse

Comcast is charging Netflix higher fees for the bandwidth it uses to stream movies over the Comcast network.

I use Qwest as my internet service provider, but I pay Netflix the same subscription fee as Comcast subscribers.

I should not have to subsidize Comcast subscribers because Comcast is charging Netflix at a higher rate for data transmission than Qwest.

I should get a discount from Netflix for not having Comcast as my ISP.

Posted by: LathamLoop | January 27, 2011 7:49 PM | Report abuse

I do agree that Level 3 is one of Netflix's partners that deliver online videos to different networks.

Posted by: tronixcountry | January 28, 2011 5:05 AM | Report abuse

First, it's Charter Communications, not Chartered, which is a health care company. NEtflix is great, everyone hates them because they are cutting into their till. GREED AT WORK BY THE GIANTS

Posted by: citigreg | January 28, 2011 9:43 AM | Report abuse

Analysts say that by charging by the gigabyte, consumers may curb how much video they watch online, which would hurt companies such as Netflix and

Yea, but it will also hurt the cables also.

Posted by: Rocc00 | January 28, 2011 10:26 AM | Report abuse

I see Verizon's throughput is higher than AT&T's or BellSouth's....Why am I not surprised?

Posted by: moonwatcher2001 | January 28, 2011 3:16 PM | Report abuse

I see Verizon's throughput is higher than AT&T's or BellSouth's....Why am I not surprised?

Posted by: moonwatcher2001 | January 28, 2011 3:18 PM | Report abuse

I think charging by the GB is the only financially viable way to fairly help build out the infrastructure. Let those who use it the most pay the most. We already do that with gasoline usage taxes. And the cost per GB probably needn't be too much of a disincentive. I know people paying $50/month who only send a few emails and jpegs...and others who are streaming video 24/7 for the same cost. That just isn't right or a good model.

Posted by: moonwatcher2001 | January 28, 2011 3:22 PM | Report abuse

The end user should decide the speed he/she wants to receive Internet content. If low speed is acceptable then the user should pay a low amount. If the user wants things fast, then the user should be a premium. Distributors should not have to pay a premium to send content. Cable companies want to rip off both ends and everyone else that they can.

Posted by: gmclain | January 28, 2011 3:51 PM | Report abuse

I already pay my ISP to get internet service. The ISP should not be charging companies that I pay them to access.

Posted by: mdembski1 | January 28, 2011 6:28 PM | Report abuse

This is all a crock. The ISP's in this country are seriously underperforming compared to their peers in Asia and Europe. And they charge MORE for less than in Asia and Europe. They don't want to spend the bucks needed to get the Internet infrastructure to where it should be, but they will gladly take your money. Yeah... un-regulated capitalism at work...

Posted by: CoSprings_Moderate | January 28, 2011 7:01 PM | Report abuse

I hope this issue gets resolved with the consumer in mind. I lived in a rural area some time ago, and had Wild Blue and DIRECPC satellite for several years. It was very expensive, often unpredictable. After a time, they started monitoring download usage. Go over a certain, limit, and they "Fapped" (their version of a "fair access policy") you. Believe me, it didn't take long to accumulate one's monthly download quota. Too, the price of the service kept going up and up. How those price increases bettered their service was a mystery, at least to me. Here's a link to an interesting article about how we rank in Internet speed compared to other countries. Sigh. Seems like we could do better.

Posted by: dennisf878 | January 28, 2011 8:28 PM | Report abuse

Comcast really should lose Common Carrier protections if it wants to go down this road. They really are not entitled to it at all.

Posted by: Nymous | January 28, 2011 9:00 PM | Report abuse

Whats funny is how alll the american people get stirred up when something as rediculous as this happens and yet you didnt think about the real problem in the beginning which is,,,, the cost of internet in the first place that has always been way too high for the average user. It is makeing the big dogs mad because the american people are trying to find ways to save money and NETFLIX is one of those ways versus a high cable bill etc. And people wake up, havent any of you ever wondered why every internet provider charges differently when internet is internet and it all comes from the same place but yet us as the consumer pays tripple if not more for it. STOP GETTING MAD AMERICA AND LETS GET OUR COUNTRY BACK

Posted by: off_shore54 | January 29, 2011 12:24 AM | Report abuse

Post a Comment

We encourage users to analyze, comment on and even challenge's articles, blogs, reviews and multimedia features.

User reviews and comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions.

characters remaining

RSS Feed
Subscribe to The Post

© 2011 The Washington Post Company