Netflix says it will be fine if the FCC’s current net neutrality laws are rolled back under the oncoming Trump administration, as is expected.
As part of its latest quarterly earnings report, Netflix took time to assuage any shareholder fears over its fate in a deregulated telecoms environment.
“Weakening of US net neutrality laws, should that occur, is unlikely to materially affect our domestic margins or service quality because we are now popular enough with consumers to keep our relationships with ISPs stable,” the company wrote.
Netflix might not be totally wrong: While internet service providers may be able to charge services like Netflix for access to their networks — the company did just that with Comcast prior to the 2015 introduction of the current net neutrality rules — Netflix is still a massively popular service with weight in the market. Paying an ISP for direct access to its network is something it could pull off, potentially giving it an edge over smaller (or future) streaming competitors that would be more hampered by any fees. It’d still be in some sort of driver’s seat, in other words. Any agreements would likely allow for superior streaming quality for customers on those networks as well.
That said, it would result in Netflix paying fees that don’t exist today, costs that could be dumped back into consumer subscription prices.
Beyond that, as seen with the zero-rating policies in practice today, ISPs and mobile carriers would likely exempt streaming competitors they own from their data caps, giving their services a technical leg up. AT&T allows its own DirecTV Now service to be streamed for free on its network, for instance. This discriminatory approach to data caps is something Netflix has very vocally opposed in recent years.
Continuing along those lines, Netflix further reiterated an ideological support for net neutrality in its report.
“On a public policy basis, however, strong net neutrality is important to support innovation and smaller firms,” the company said. “No one wants ISPs to decide what new and potentially disruptive services can operate over their networks, or to favour one service over another. We hope the new US administration and Congress will recognise that keeping the network neutral drives job growth and innovation.”
That may remain a “hope,” though. The FCC’s de-regulatory-minded Republicans will take a 2-1 majority in the Commission once Trump takes office on January 20, and have already signalled that the current Open Internet Order, and its classification of the internet as a public utility, will be on the chopping block. Commissioner Ajit Pai, who is expected to be named the FCC’s interim chairman in the coming days, said that the current policy’s “days are numbered” in a speech last month, for one. A recent Multichannel report, meanwhile, said that Trump’s team may try to de-emphasise the FCC’s regulatory powers as a whole.