Netflix CEO Reed Hastings is calling for the federal government to administer regulations over “peering disputes,” disagreements between Internet service providers and the content providers that pay for the transmission of network traffic.
Hastings wrote to House Energy and Commerce Chairman Fred Upton (R-MI) and Communications Subcommittee Chairman Greg Walden (R-OR) in April to advocate for “comprehensive legislation” that “assures consumer choice and innovation while preserving incentives for broadband network operators to continue to invest in their infrastructure.”.
More government involvement would do nothing to help resolve these disputes, says Seton Motley, president of Less Government in Alexandria, Virginia. “Why does no one know what peering is? Because it works. Why does it work? Because the government isn’t at all involved.”
Transmission Fees Hiked
Netflix has changed its business model from one focusing on mail exchanges of DVDs to a concentration on streaming video over the Internet, and as a result it is using much more bandwidth over the cable and phone systems. A study by The NPD Group says Netflix had a 61 percent of the streamed/downloaded digital movie market between January and February 2011. Netflix streams six out of every 10 digital movies it rents.
Netflix partner Level 3 argues phone and cable companies have hiked transmission fees unfairly as a result of the growth of streaming video.
Hastings stated the fees were unfair. He said a key shortcoming of the Federal Communication Commission’s controversial net neutrality order passed this past December is that it doesn’t “expressly deal with entry into an ISP’s network.”
Hastings called the FCC’s net neutrality regulations a step in the right direction and stated he opposes the Republican-sponsored Resolution of Disapproval on net neutrality regulations.
Although Level 3 says the fees represent a net neutrality infraction, FCC Chairman Julius Genachowski has said the FCC’s rules do not apply to peering disputes.
“Companies like Netflix are looking to use tons of Internet bandwidth and to have the government force the bandwidth providers to let them do so for free,” Motley said.” If the government allows Netflix to steal Internet bandwidth, there’s only one place the bandwidth providers can make up the exorbitant cost—on us. A free ride for Netflix means much bigger Internet bills for you and me.”
Motley wonders: “Will this be another dose of Obama administration crony capitalism? Another giant corporate friend of Obama gets a free ride, and We the People get the bill.”
Steve Titch, a telecom policy analyst for the Reason Foundation in Los Angeles, California, says the government should definitely refrain from interfering in markets by imposing any type of price regulation.
“Regulating [such] agreements will create havoc,” Titch said. “It’s a matter of supply and demand. If the government starts dictating prices, then we will have shortages or gluts. The government should stay out of regulating peering arrangements and leave them to the parties that are involved.”
Phil Britt ([email protected]) writes from South Holland, Illinois.