Netflix: The FCC is Going to Help Cable Companies Screw Us Over
The Federal Communications Commission is drawing the ire of Netflix (NASDAQ:NFLX) for its support of tiered broadband Internet plans, which FCC Chairman Julius Genachowski said Tuesday would be “healthy and beneficial” for broadband and high-tech industries.
Speaking during a cable industry trade show in Boston today, Genachowski was responding to an issue brought up by Michael Powell, a former FCC chairman and current chief executive of the National Cable and Telecommunications Association. Powell said cable providers would like to be able to experiment with pricing plans based on tiers. Comcast (NASDAQ:CMCSA) said last week it would experiment with new tiers, and raised the cap for users to 300 megabytes for the lowest tier, from 250 megabytes.
Representatives for services like Netflix and Hulu (NYSE:DIS) have criticized the practice, saying users will be punished for watching streaming video service, as Comcast said in an FCC filing that, when its network becomes congested, it will temporarily slow traffic to customers requiring the most bandwidth — and that means streaming video watchers.
Many argue that the caps Comcast would seek to impose have less to do with network management and more to do with protecting Comcast’s pay-TV business by discouraging customers from spending a lot of time watching TV online.
Netflix CEO Reed Hastings is also crying foul over how Comcast isn’t counting video use of its own XFinity services against data plans, giving it an unfair advantage over streaming competitors.
But Genachowski didn’t seem to share Hastings’ concerns. “Business model innovation is very important,” Genachowski said. “There was a point of view a couple years ago that there was only one permissible pricing model for broadband. I didn’t agree.”