If you believe Netflix (NASDAQ: NFLX ) , the Internet is in serious jeopardy. On Tuesday, the company joined the chorus of commenters submitting opinions to the FCC on the issue of promoting the open Internet. In the comments Netflix says that nothing less than the integrity of the Internet, "this country's, if not the world's, most important platform for economic growth, innovation, and competition," is at stake.
The topic is one of the FCC's most controversial in years, having attracted over 1 million comments to date. And, as Netflix is responsible for up to 30% of peak-time Internet traffic to homes, it is uniquely exposed to any changes that might bring the Internet closer to what it calls a "pay for prioritization" model, where service providers charge companies fees for faster access to their customers.
Here are five dire warnings for the future of the Internet taken from Netflix's comments. They paint a dark picture for consumers should the FCC's proposed rules be adopted, and they also explain why Netflix's expenses would jump at the same time.
1. The Internet will become like cable. Broadly speaking, Netflix argues that the FCC's proposals "turn the objective of Internet openness on its head -- allowing the Internet to look more like a closed platform, such as a cable television service, rather than an open and innovative platform driven by the virtuous cycle" of cooperation between "broadband networks and the information and services they carry."
2. Internet service providers will be kings. Instead of consumers having completely free choice over the content that they want to see, prioritization will allow ISPs like Comcast (NASDAQ: CMCSA ) and Verizon (NYSE: VZ ) to "choose what their subscribers see and do on the Internet and from whom they get their content."
3. Internet service will be slower. Despite all of that new power for ISPs, paid prioritization would set up a "perverse incentive" for them to "forego network upgrades" in order to make their fast lanes more valuable, Netflix says. After all, if there wasn't any network congestion at all, then there would be no need to pay extra for faster access.
4. Video delivery will be sluggish. "When an ISP like Verizon fails to upgrade interconnection points to its network, Netflix data enters the network at a drip-like pace, and consumers get a degraded experience despite already paying Verizon for more than enough bandwidth to enjoy high-quality online video services." This scenario has already happened, "particularly on Comcast's and Verizon's networks," Netflix says.
5. Netflix (and other companies) will have to pay more. Still, there is "one and only one way to reach Comcast's subscribers: through Comcast," Netflix points out. Its deal with the cable giant back in March was comparable to an access fee, "without which Comcast has refused to provide sufficient capacity for Netflix movies and TV shows to enter its network and to reach our mutual customers efficiently and without degradation." By paying Comcast more, Netflix only was able to bring its customers' experience back up to high-definition quality from the VHS quality they were seeing immediately before.
Do you agree with Netflix's predictions? Sound off in the comments box below.
Your cable company is scared, but you can get rich
Thanks in part to Netflix, you know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple.