Last week's court ruling on “net neutrality” seemingly threw open the doors for Internet service providers to vary the download speeds for Web services. Essentially, ISPs could charge premium rates to high-volume websites to keep high download speeds. Otherwise, some video services that don't pay up for premium speeds could find their video feeds buffering until doomsday.
And that is why half the Internet was wringing its hands over Netflix by midweek. Netflix is one of the biggest bandwidth hogs in cyberspace, by some estimates responsible for one-third of domestic bandwidth consumption. At first glance, the Jan. 14 ruling by the U.S. Court of Appeals for the District of Columbia Circuit would affect Netflix and its subscribers more than any other Web entity.
The concept of net neutrality is idealistic, but it's been fairly resilient over the nearly 20 years since I got my first dial-up account. It asserts that all content receives the same treatment — it doesn't matter if it's a cats-in-dresses Tumblr page or Amazon.com. The Federal Communications Commission, which supports net neutrality as policy, could appeal the ruling and possibly take the case to the U.S. Supreme Court.
But nothing is exactly as it seems, particularly in the new frontier of streaming video. While Netflix stock took a slight hit on the news of the ruling, the story of net neutrality is probably not over.
As Derek Thompson noted at TheAtlantic.com, the service providers could take the brunt of the bad will if Netflix streams slow to a trickle. If the ruling stands and companies such as Verizon, Comcast, Time-Warner Cable and Cox Communications can charge Netflix or Amazon extra for their bandwidth consumption, and those companies refuse to pay the premium, then both sides are responsible for that annoying “buffering” circle in the center of users' televisions. But which side traditionally gets the blame in these scenarios? Usually, people start screaming epithets at their ISPs, even if the reality is not that simple.
Still, there are other variables at play. At this point, no one knows how much the ISPs would charge Netflix and other high-volume Web entities, though USA Today cited one analyst from Stifel Nicolaus as estimating that Netflix might incur up to $100 million in additional costs.
Given how flush both companies were at the close of 2013, Netflix and Amazon might just pay the higher rates and pass the cost along by hiking their monthly subscription by about the cost of a soda, and life goes on as usual. Furthermore, Thompson floated the idea that the FCC, bolstered by new regulatory power, could just make ISPs public utilities, which then would be required to deliver for everyone without discriminating. This would effectively preserve at least the basic function of net neutrality.
But there are no obvious outcomes. For Netflix, this story is still buffering.