The Federal Communications Commission made clear today that it won't heed Netflix CEO Reed Hastings' call to expand the scope of net neutrality to regulate the way companies connect across the physical infrastructure of the internet. This system, which includes internet companies like Netflix, middlemen like Cogent, and internet service providers like Comcast, is the backbone that moves data across the country from Netflix servers into consumers' homes.
Netflix wants an end to internet "tolls"
Hastings had called on the FCC to create a system in which companies like Netflix would not have to pay "tolls" to companies like Comcast for special connections that help ensure its video gets to customers without problems. Netflix agreed last month to begin paying Comcast for exactly this privilege, but said this was a one-time arrangement while it pushed for new rules.
"Peering and interconnection are not under consideration in the Open Internet proceeding, but we are monitoring the issues involved to see if any action is needed in any other context," an FCC spokesperson told the National Journal. Confusingly, at the same time, the agency also said that it was considering new rules to regulate the paid arrangements between companies like Comcast and Netflix.
According to sources familiar with the deal, Netflix scored an attractive and long-term bargain with Comcast. But Hastings knows that he may soon have to strike deals with Verizon and AT&T as well. Paying each ISP for improved connection to their networks could end up becoming a big drag on Netflix's bottom line down the road as its customer base swells and the quality of video it's sending increases.