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Netflix Fears the Internet Could Become Like Cable TV

Fights between big companies could leave Internet users in the dark, the video site's lobbyist warns.

A sign is posted in front of the Netflix headquarters on January 22, 2014 in Los Gatos, California.  (National Journal)

When negotiations between big media companies and cable TV providers break down, viewers are often left without access to their favorite channels and TV shows.

A fight between CBS and Time Warner Cable last year blacked out channels for millions of consumers. Subscribers to small cable providers lost access to Viacom channels earlier this year.

Those blackouts could be a preview of the Internet's future, Netflix's top lobbyist warned during a panel discussion Wednesday.

Christopher Libertelli said federal regulators should intervene or the Internet service providers could "turn the Internet into more of a cable television system."

Just like in the cable TV industry, disputes between video websites and Internet service providers could keep customers from watching the shows they want, he warned.

For years, websites have hired third parties to deliver data to Internet providers, who carry the content to consumers' homes. In recent years, because of the massive amount of data that Netflix is delivering to its subscribers, the company has been bypassing those third parties and connecting directly to the providers' networks. Those direct connections ensure that Netflix videos stream as smoothly as possible.

But Comcast and other providers are demanding that Netflix pay for direct access to their networks. If Netflix doesn't pay up, videos become grainy and take longer to load.

"This interconnection point has become the new choke point, the place for ISPs to tax content companies," Libertelli argued during the panel discussion hosted by the Aspen Institute.

He said Netflix chose to pay Comcast earlier this year for a direct-connection deal because the situation had become "intolerable."

"We paid our way around congestion," he explained.

The Federal Communications Commission's net-neutrality rules only cover how Internet providers handle traffic once it's on their network. The regulations don't affect how networks connect to each other.

But Libertelli warned that the FCC shouldn't just give Internet providers a new place to discriminate. He urged the agency to enact new regulations or impose conditions on the massive mergers pending before the agency to ensure Web companies can connect to broadband networks for free.

Jim Cicconi, AT&T's top lobbyist, argued that Netflix has always had to pay to transmit its traffic and that there's nothing special about the direct-connection deals.

"Netflix wants free. I get it," he said during the panel discussion. "Somebody ends up having to pay for the transmission of that traffic."

Regulations requiring free connections would end up forcing all Internet users to pay for Netflix's traffic, regardless of whether they actually subscribe to the service or not, he said.

In an emailed statement following the discussion, Sena Fitzmaurice, a Comcast spokeswoman, argued that only Netflix can decide how to deliver its traffic.

"They choose the path the traffic takes to us. They can choose to avoid congestion or inflict it," she said.