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In this Tuesday, Oct. 23, 2012, photo, a woman holds up a Netflix envelope to be photographed in front of  a Netflix application on a television in East Derry, N.H.  (AP Photo/Charles Krupa, File) In this Tuesday, Oct. 23, 2012, photo, a woman holds up a Netflix envelope to be photographed in front of a Netflix application on a television in East Derry, N.H. (AP Photo/Charles Krupa, File)  

Court rules Netflix improperly favored by US Postal Service

A federal appeals court ruled Tuesday that the U.S. Postal Service has been giving the video rental service Netflix preferential treatment over other mail-order companies.

Video game rental service GameFly had sued the Postal Regulatory Commission in May 2011, alleging that the Postal Service was manually handling Netflix’ movies to prevent their DVDs from breaking. GameFly alleged that its disks are given no such special treatment, putting the disks at risk of breaking.

Tuesday’s ruling by the court “ordered the Postal Regulatory Commission to cure ‘all discrimination’ against the company or explain why treating GameFly different from Netflix is reasonable,” Bloomberg reported.

The ruling will likely affect the way the Postal Service handles the Netflix movies.

Netflix has lobbied hard for special treatment for another arena the company calls home — the Internet. A 2011 study showed that Netflix is “the single biggest user of internet bandwidth in North America,” reported Yahoo News.

In 2010, the Federal Communications Commission passed the Open Internet Order, which ruled that Internet Service Providers (ISPs) such as AT&T and Verizon could not favor their own media content over others.

Netflix, one of the lead advocates of the regulation, favoring intervention by the federal government to keep ISPs from favoring certain content over others, specifically content owned by ISPs.

The order — couched in Internet freedom, anti-censorship and free speech language — faced immense opposition from Republican members of Congress, believing that the Commission lacked the proper legal authority to demand such a mandate. The fate of the ruling now awaits a verdict in a federal appeals court.

In 2012, Netflix complained that Comcast was in violation of the order by alleging that Comcast was favoring its Xfinity service over other video services, prompting an investigation by the Justice Department.

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