Netflix, Net Neutrality, and Beyond

Thesis statement: The internet needs more regulation to prevent power houses from utilizing their position to promote their position.

The basis of my argument revolves around a fundamental concept: the internet is a utility. The internet has become a fundamental part of our lives similar to electricity. I know that I personally feel lost if I am ever without an internet connection. On that note, the internet needs to be regulated similar to other industries. A key concept that governs internet regulation revolves around net neutrality – which is a principle that all internet traffic is treated equally. That means that data and broadband services cannot be manipulated or altered based on the type of application being used by the consumer. An example that is questioned to violate net neutrality recently involves Netflix – the streaming video an TV show provider.

In an article published by the Wall Street Journal titled “Netflix Recants on Obamanet,” author L. Gordon Crovitz calls out Netflix for violating net neutrality. “Last week, Netflix violated a core tenet of net neutrality when it launched its service in Australia as part of a “zero rating” offering by broadband providers, which excludes its video from data caps. Net neutrality advocates want to outlaw such deals. Netflix shrugged off this objection: ‘We won’t put our service or our members at a disadvantage.’” So Netflix clearly violated net neutrality and admitted to it, but there is no organization with authority or jurisdiction to enforce it yet. Now although the move by Netflix was to advantage their consumers (rather than attack competitors), they still violated net neutrality and faced no consequences. It is worth noting that I am picking on Netflix here simply because they are the largest provider of online streaming video services and are best positioned to be able to take advantage of the lack of internet regulation. You could even go far enough as to say that Netflix has a monopoly (which it is economically beneficial to have more regulation to prevent monopolies).

Those familiar with government regulation regarding monopolies may ask: if Netflix is already a monopoly, then why isn’t any legislation being brought about onto them? My response is that the online video streaming service industry is not that large or quintessential to consumers as say telecom. For that reason, the telecommunications industry is much more heavily regulated and recent laws have been enacted to prevent a duopoly among the two largest wireless telecom providers Verizon VZ and AT&T T. It is also for this very reason that the internet needs more regulation. While wireless telecom has scale and is concise in its services (calls, texting, data, etc.) the internet is highly fragmented and has many different facets (web browsing, broadband, streaming, data, etc.). So it is important that there is general oversight over the internet to prevent monopolies from occurring in specific segments to promote capitalism. Because although Netflix might not be considered a monopoly by traditional measures, they possess unique pricing power and capability to take advantage of the lack of internet regulation.

 

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