If Donald Trump’s administration rolls back net neutrality, it could have a number of consequences for Netflix, Inc. , according to a report from The Motley Fool.
Net neutrality is the concept that internet service providers (ISPs) should treat all data traffic equally and don’t discriminate or charge deferentially by content, user, website, platform, equipment, mode of communication, or application. In February 2015, the Federal Communications Commission Chairman Tom Wheeler passed the Open Internet Order, a set of regulations establishing the internet neutrality concept.
Why Is Trump Threat To Net Neutrality
The report suggests that Trump named two advisors last week who could create problems for Netflix by rolling back net neutrality. The two men, Jeff Eisenach and Mark Jamison, are prominent opponents of net neutrality. They have previously spoken against net neutrality, serving as a lobbyist for the telecom industry. Eisenach believes net neutrality is a form of “crony capitalism.”
For Netflix, net neutrality is a sensitive issue. The video streaming service takes up more web traffic than any other company but owns no cables or pipes that bring the internet into homes.
“We support strong net neutrality across the globe, allowing all consumers to enjoy the Internet access they pay for, without ISPs blocking, throttling, or influencing content in the last mile or at interconnection points,” the streaming giant said in a recent earnings report.
Net Neutrality and Netflix
In February of 2015, the FCC issued a set of rules to preserve the internet as a platform for innovation, free expression, and economic growth.
The Open Internet also prohibits blocking access to websites, throttling traffic, or accepting payment to favor one content source over another. The regulations were opposed by telecoms like Verizon. Netflix has long been one of the biggest proponents of net neutrality as the company has more than half of its subscriber base in the U.S.
“If Trump’s FCC rolls back net neutrality, it could have a number of consequences for Netflix, other streamers like Hulu and Amazon Prime, and small, independent content providers that may be unable to afford higher fees that ISPs could charge for better service,” Jeremy Bowman writes in The Motley Fool.
According to the report, undoing net neutrality will likely result in rise in prices for consumers as ISPs could charge extra fees to for streaming from big bandwidth eaters like Netflix.
“Stricter data caps could also apply to mobile devices, making it harder to use such services away from home,” the report added.
The end of net neutrality could make Netflix more expensive for the average person in the U.S., which is the company’s biggest market. CEO Reed Hasting is expected to come with a plan to address this issue. We can expect to see a strategy in the next earnings report, if not sooner.
A report from The Verge suggested that Trump’s FCC will have power to overturn net neutrality order, but it could take years to craft a replacement plan.
According to the reports, the net neutrality replacement plan could do lasting damage to the FCC’s reputation. “In terms of the commission’s credibility, it would just look so awful,” said Michael Copps, a special adviser at Common Cause who served as commissioner on the FCC from 2001 to 2011. “If I were Trump, I would see it as a battle that’s been fought already.”