There has been a lot of attention in the news lately about Net Neutrality and how the Netflix/Comcast deal plays in the future of the internet.
If you are one of the millions of Comcast customers who subscribe to Netflix, connection speeds and downloading have already improved. That’s good news, though it opens up a whole series of questions.
The deal between the two media companies was struck sometime last week and announced on Sunday but industry insiders had already noted a marked improvement in Netflix stats. In the short term, if you are on Comcast and using Netflix, your experience has likely already improved.
Netflix acted to make sure that its customers would continue to get top quality service. By cutting out the backbone service provider that acted as middleman, it’s even possible that the undisclosed deal might have saved them money and hassles in the future while their market share potentially grows.
It certainly looked good Monday from Wall Street. Netflix showed a new high of $445.75 per share at midday, while Cogent, the former backbone ISP for Netflix closed down 6%.
Certainly Comcast seems a winner today. Poised on the edge of a deal to buy Time Warner Cable for a reputed $45 billion they will be able to deliver to an estimated 60 percent of broadband subscribers. If it’s passed, two big giants have secured a position of power in future deals.
For the average Comcast or broadband internet subscriber, there might not be any noticeable service drawbacks. Indeed, against the more tangible advantage of faster on-demand video downloads from Netflix, the drawbacks are more nebulous.
Under the system that allowed these middlemen companies to flourish, these backbone ISPs gave large bandwidth to Netflix for a price. They then used existing agreements with other smaller “down-the-wire” Internet Service Providers to pass the transmission on to the end user. This allowed companies that provide internet content, like Netflix, to shop around for an ISP. It prevented a concentration of power with the few from using their power to provide faster, more reliable service for only some content and suppressing or slowing down others.
In the long run, this deal may well be the start of many changes to come, just as some predict. While lucrative companies like Netflix can afford to make sure their product continues to provide what its customers have come to demand. Smaller companies will not be able to compete.
The pain for consumers is in the potential loss of future Netflix. The upstarts that won’t start someday because they cannot meet the requirements of a gatekeeper like Comcast. It becomes increasingly likely that the recent changes through the FCC will see common use of throttling or promoting content based on the rates of service in an increasingly monopolized broadband market.
While some predictions are questionably dire, it does lead to concerned speculation. The outcomes of negotiations between Cogent and Verizon over Netflix traffic would be another blow to backbone providers like Cogent. Comcast’s bid to purchase Time Warner would also change the playing field.
The Bottom Line
We already see these recent changes and decisions affecting the end user’s experience with Netflix. How this might carry over and affect other content providers, or the content that can be accessed by the consumer, remains to be seen.
The systems that led to the neutrality of the net in the heyday of the 90s and early 2000s are breaking down.
How or even if the FCC should do anything about it is hotly debated. The doomsday predictions for the death of the internet might be premature, however. After all, the internet is the essence of innovation. As the landscape changes there are always people who find a way to break the mold.