Netflix tumbles as Street mulls net neutrality ruling

After trading sideways yesterday (in the face of a market rally) following an appeals court's decision to throw out the FCC's wireline net neutrality rules, Netflix (NFLX -4.9%) is diving today.

Wedbush's Michael Pachter (Underperform) thinks ISPs could try to charge Netflix and others a fee for every GB of data transmitted over their networks. He notes each hour of SD and 1080p video streamed by Netflix to 40"-50" TV sets respectively consumes 1GB and 6.5GB of data.

Though services such as Netflix drive demand for high-speed connections, U.S. ISPs (many of whom double as pay-TV providers) have nonetheless been upset over the streaming giant's heavy data consumption. Netflix has been trying to address the issue via its Open Connect CDN, but not all major ISPs are on board.

FCC chairman Tom Wheeler has already said his agency might appeal yesterday's ruling, so as to guarantee "networks on which the Internet depends continue to provide a free and open platform for innovation and expression."

Wheeler previously suggested Netflix could pay ISPs to guarantee subscribers "receive the best possible transmission." But he also reiterated his opposition to allowing ISPs to block/limit services.

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Comments (13)
  • GoochyPuppy
    , contributor
    Comments (282) | Send Message
    What does the physical size of the TV sets (40"-50") have to do with data consumption?! 1080p in HD is the same bandwidth if you have a 4" or 100" screen! Doh!
    15 Jan 2014, 01:12 PM Reply Like
  • JD in NJ
    , contributor
    Comments (1634) | Send Message
    This is certainly true, although it seems a bit of a waste to stream full 1080p onto a 4" screen, unless one holds it REALLY close to one's face.
    15 Jan 2014, 03:09 PM Reply Like
  • andypochta1
    , contributor
    Comments (1305) | Send Message


    What cable companies charge does not have to make any sense, they just do. There is a South Park episode about that, gross but pretty funny.


    They've let Netflix grow for a while and now they will start taking Netlix's lunch.
    15 Jan 2014, 04:49 PM Reply Like
  • Andrew Shapiro
    , contributor
    Comments (2186) | Send Message
    While not as much a data hog as video, what about impact on music streaming services such as Pandora $P; They don't have the benefit of substantial subscription $ streams
    15 Jan 2014, 01:21 PM Reply Like
  • Vern Hoffmann
    , contributor
    Comments (196) | Send Message
    This is bad for all of us. It just means that it's only a matter of time before they start charging everyone and start setting data limits on basic internet service, just like mobile data limits. It stifles innovation.
    15 Jan 2014, 02:42 PM Reply Like
  • Guzman3
    , contributor
    Comments (96) | Send Message
    I think it was easy to predict this happening. Cable companies buy the content then spend money to deliver it to you which increase their subscription cost. Netflix has been using free services even cheaper than mailing its DVD .
    15 Jan 2014, 02:42 PM Reply Like
  • JD in NJ
    , contributor
    Comments (1634) | Send Message
    Free? I pay for my data link to the Internet, and they certainly pay for their links, too. It's not free for anyone.


    The service providers, in particular the cable companies, are just miffed that a competitor isn't paying surcharges to route their specific patterns of ones and zeroes.
    15 Jan 2014, 02:57 PM Reply Like
  • sixclicksto155
    , contributor
    Comments (3) | Send Message
    You're right, cable companies deserve more money. $100-150 a month for TV and 20 Mb/s internet is a great value compared to the rest of the modern world.
    15 Jan 2014, 04:48 PM Reply Like
  • sarichter
    , contributor
    Comments (607) | Send Message
    I sure hope that is sarcasm... I won't argue that cable is a necessity, but I would argue that the internet is slowly becoming that way. Open access to the internet should be as just about all business is conducted through it. If you are too poor to get on, you can't take advantage of the information on it. That sounds very 'top-down' to me.
    15 Jan 2014, 04:57 PM Reply Like
  • sarichter
    , contributor
    Comments (607) | Send Message
    It's getting closer and closer to the time I won't be subscribing to any form of entertainment. The outdoors is better anyway... and free.
    15 Jan 2014, 02:51 PM Reply Like
  • Sakelaris
    , contributor
    Comments (2689) | Send Message
    Telephone lines go under or over our properties whether we like them or not. The companies controlling them know this and they know that they have little or no competition due to the nature of the business. This means that they should be regarded the same as we regard the providers of electric, gas, or water service: We should regulate ISPs as we would any other utility.


    If an ISP is wanting to use its monopoly power to fight one company while favoring a business venture that the ISP is related to, then the government has an interest in stepping in and preventing that. And once all the court decisions are made, expect Congress to enact laws that will protect the consumer rights of Netflix and Amazon Prime users, laws that will be within the parameters of the court rulings.


    And, although I like my streaming, please do not call me a bandwidth hog, for I also use Netflix DVDs; they certainly take up no bandwidth!
    15 Jan 2014, 03:27 PM Reply Like
  • Mark Krieger
    , contributor
    Comments (6512) | Send Message
    fear mongering for sure...NFLX is not going out of business. Its stock simply got a little ahead of itself.
    15 Jan 2014, 03:41 PM Reply Like
  • racchole
    , contributor
    Comments (567) | Send Message
    I'm no expert, but the cord cutters would rather have NFLX, and no TV.


    NFLX pairs with Google, and offers a joint Google Fiber-Netflix experience, see you later Cablevision and Co.
    15 Jan 2014, 03:59 PM Reply Like
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