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Netflix Is Holding ISPs Hostage over HD Streaming

Netflix just gave net neutrality the middle finger.

Netflix just gave net neutrality the middle finger. The video streaming service announced at the Consumer Electronics Show that it would start blocking high definition and 3D stream access to any ISPs that aren’t on board with its new program, dubbed “Open Connect.” But don’t be fooled by the double-speak, Netflix’s new program is really reverse net neutrality as well as anticompetitive.

As Netflix struggles to deal with rising costs, Open Connect is a way to share the burden. It’s essentially a direct line to the ISPs, an Internet fast lane built exclusively for Netflix content, one that Netflix expects the ISPs to pay for and maintain, or risk pissing of its customers who want to watch Star Wars in glorious HD (the company recently announced a multi-year licensing deal with Disney).


By shifting the costs to ISPs (Cablevision, Virgin Media, British Telecom, Telmex, Telus, TDC, and GVT have already signed up), Netflix is really spreading the cost burden on to everyone, even if you aren’t a Netflix subscriber. Meanwhile, it will leave competitors wondering how to deal with Netflix's preferential treatment. The bigger fish, like Hulu and Amazon, will understandably want their own direct lines to the Comcasts of the world if Netflix ends up having its way. Left in the cold are budding startups.

Time Warner isn’t having it though:

“While they call it ‘Open Connect,’ Netflix is actually closing off access to some of its content while seeking unprecedented preferential treatment from ISPs. We believe it is wrong for Netflix to withhold any content formats from our subscribers and the subscribers of many other ISPs. Time Warner Cable’s network is more than capable of delivering this content to Netflix subscribers today.”

It’s kind of funny because this whole time, while the Internet geeks were worrying about the net neutrality apocalypse, everyone assumed it would be the evil ISP gatekeepers that would end up screwing over the consumers. The whole fiasco shines a harsh light on the FCC’s asymmetric net neutrality rules adopted in late 2010. All of which allows Netflix to leverage its position as top dog and hold ISPs and consumers alike hostage unless we all buy into its anticompetitive program, a dangerous precedent for the future of the open Internet.