Netflix, self-interest and net neutrality

The recent announcement by Netflix that it has been reducing the video quality of its programs on mobile networks for years — something the new net neutrality rules prohibit Internet service providers (ISPs) from doing — has sparked a firestorm by opponents of net neutrality regulations.

{mosads}From the Federal Communications Commission (FCC) and cable and telecom interests have come expressions of outrage that Netflix never acknowledged this practice during the time when regulators were actively considering, and ultimately approving, utility-style regulation of ISPs.

Though Netflix has kept a low profile since acknowledging its throttling, it has averred that it did so to assist some of its customers in remaining under data caps. FCC Commissioner Michael O’Rielly, though, takes a dim view of that argument, saying in a recent speech that “Netflix has attempted to paint a picture of altruism whereby it virtuously sought to save these consumers from bumping up against or exceeding their data caps. There is no way to sugarcoat it: The news is deeply disturbing and justly generates calls for government — and maybe even congressional — investigation.”

O’Rielly acknowledges that, because the net neutrality rules don’t apply to so-called “edge providers” like Netflix, there is no Open Internet violation here, and he refutes any suggestion that, under the circumstances, net neutrality restrictions should be imposed on Netflix or other edge providers.

The thing that troubles O’Rielly is that this Netflix practice was never revealed in the company’s many filings to the FCC during that agency’s net neutrality proceeding:

We need to closely examine filings that were made for potential violations in light of this new information. It appears that Netflix made accusations of wrongdoing by ISPs, all the while knowing that its own practices were one of the causes of consumer video downgrading. …

Many rules were based on the representations made by Netflix and other similarly situated entities, including Google. Certainly, the entire interconnection regime was predicated on the fears of anti-competitive peering and gatekeeper status concocted by Netflix. And yet, at the same time it was making these claims, Netflix, itself, was engaged in highly suspect behavior. These revelations call into question the entire foundation and rationale of the net neutrality decision.

It’s easy to understand why net neutrality opponents would be angered by Netflix’s untimely revelation about its video throttling, and one hopes it will be investigated by Congress and the Federal Trade Commission. But even if, after some scrutiny, Netflix’s belated admission is found to be offensive to the spirit, if not the letter of the law, this is not the greatest offense in the whole sorry history of the FCC’s net neutrality campaign.

After all, we are quite familiar these days with the venal aspects of crony capitalism, whereby companies get policymakers to do their bidding, whatever the costs to others or to the country as a whole.

It might be helpful in that regard to ponder this one stunning datum: The two companies that generate more than half of all downloads in North America are Netflix and Google. And it was those two companies, and their amen chorus in what is laughingly referred to as the tech media, that led the way to what became the net neutrality rule.

Indeed, one can say that the whole of the net neutrality case was conjured up by, and for the express benefit of, exactly two companies. That their efforts were joined by other Internet companies and associations speaks not to those other groups’ civic nature, but to their captive state in the Google-Netflix imperium, and to their mind-numbing lack of knowledge about things like politics and history.

An associate of liberal but real-world sensibilities recently asked some tech moguls this question regarding net neutrality: Why in the world, he said, would you invite the government into an oversight role in your industry?

And it is that, not their obvious hypocrisy, which is the unforgivable offense at the heart of net neutrality’s promotion by Netflix.

Down through the decades, the brightest scholars and First Amendment experts — people like Ithiel de Sola Pool — have warned against the inherent threat to free speech when governmental bodies acquire authority over technology and the media. Indeed, de Sola Pool’s masterwork is titled “Technologies of Freedom.” And from its inception until February of last year, the Internet grew and prospered, unfettered by the kinds of regulation that have been imposed on cable and broadcasting.

But that is over now, and only history will tell us how much mischief this dreadful regulation will do to the Internet, and to us all.

Maines is president of the Media Institute. The opinions expressed are those of Maines alone and not of the Media Institute’s trustees, advisory councils or contributors.