Netflix just reported its Q4 2013 earnings, and amidst the good news was a word of caution in the company's letter to investors. Last week, a federal court struck down the FCC's net neutrality rules — and Netflix took notice. "Unfortunately, Verizon successfully challenged the US net neutrality rules," Netflix writes in its shareholder letter. "In principle, a domestic ISP now can legally impede the video streams that members request from Netflix, degrading the experience we jointly provide."
In a worst-case scenario, Netflix imagines a situation in which it would have to pay fees to ISPs to stop that degradation, but it sounds like the company wouldn't just sit back and let that situation happen. "Were this draconian scenario to unfold with some ISP," Netflix writes, "we would vigorously protest and encourage our members to demand the open internet they are paying their ISP to deliver."
Netflix is ready to rally its user base if need be
However, the company doesn't see that as a very likely outcome. The company feels that ISPs are likely to avoid this "consumer-unfriendly path of discrimination" because of "broad public support" for net neutrality — and because the carriers and ISPs "don't want to galvanize government action." Additionally, Netflix seems very aware of its position as a potential friend of the ISPs — it says that high-quality video streams (like ones that Netflix provides) are a driver of the more expensive broadband plans.
That said, Netflix will definitely be keeping an eye on how ISPs respond to the new net neutrality landscape. "In the long-term, we think Netflix and consumers are best served by strong network neutrality across all networks, including wireless," Netflix writes. If "some aggressive ISPs start impeding specific data flows," however, Netflix says more regulation will be needed — and it has a big user base that would certainly make some noise if their video experience starts getting worse.