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Netflix CFO Reverses Course, Shuns ‘Obamanet’

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Peter Fricke Contributor
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Netflix has been among the leading advocates of Internet regulation, but its CFO is now downplaying that support in the wake of the FCC’s decision to regulate the Internet as a public utility.

The Wall Street Journal reported Sunday that Netflix CFO David Wells admitted last week that the company “[has] lobbyist’s remorse only a week after the Federal Communications Commission voted to replace the open Internet with Obamanet.” (RELATED: FCC Votes in Favor of Net Neutrality)

In February, the FCC approved its “Open Internet Order,” which re-classifies broadband networks as a telecommunications service under Title II of the Communications Act in an effort to prevent Internet service providers (ISP’s) from either blocking legal content or prioritizing certain types of content by charging fees for faster access speeds.

FCC Chairman Tom Wheeler has promised that the Commission will “forbear” from the most burdensome regulations included in the order, but critics are concerned that even if the current commissioners make that promise, future commissioners could always reverse course.

“Were we pleased it pushed to Title II?” Wells said to investors. “Probably not. We were hoping there might be a non-regulated solution.” (RELATED: Net Neutrality Bait and Switch to Title II)

Wells’ comments were particularly significant in light of the company’s long-standing support for Title II regulations, which it has advocated in the belief that they would protect it from having to pay ISPs in order to guarantee adequate bandwidth for its content, a practice known as “paid prioritization.”

According to Variety, however, representatives for Netflix sought to downplay Wells’ statements, saying, “Netflix supports the FCC’s action … to adopt Title II in ensuring consumers get the Internet they paid for without interference by ISPs. There has been zero change in our very well documented position in support of strong net neutrality rules.”

In a filing with the FCC last year, Netflix called on the Commission to “use all the statutory and non-statutory tools at its disposal to adopt strong open Internet protections,” and argued that, “Title II provides a solid basis to adopt prohibitions on blocking and unreasonable discrimination by ISPs.”

“Ironically,” the WSJ article claims, “Netflix could end up the biggest loser with a regulated Internet,” because the new rules do not actually forbid paid prioritization, but rather require the FCC to determine whether connection charges are “just and reasonable.” (RELATED: FCC Commissioner Demolishes Net’s New Rules, in 3 Quick Points)

“Netflix could not operate without fast lanes, and even built its own content-delivery network to reduce costs and improve quality,” the Journal explains, but under Title II, “the FCC could force Netflix to open its proprietary delivery network to competitors and pay broadband providers a ‘fair’ price for its share of usage.”

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