Just as Frank Underwood turns to you to share his secret plan to become president of the United States, a buffering signal pops up on your computer. 2% then 23% then 68% then 2% all over again. All you want to do is finish this one episode so you can go back to work and actually get some sleep! But, the hour-long episode has already taken up an hour and a half of your time, so do you stick it out or give up?
If the Comcast-Time Warner merger is finalized this dilemma could become a non-issue for about one-third of the country’s broadband subscribers. [1]. On Sunday, Comcast and Netflix announced that Netflix would be streamed directly to Comcast subscribers, which should give them “faster and more reliable access” to Netflix. [2]. This change in streaming strategy may have been partially motivated by Netflix recently reporting that the “delivery speed of its content to Comcast subscribers had declined by more than 25 percent.” [3]. Although we should applaud the ability to watch a one hour show seamlessly, some consumer advocates are worried that customers will be the ones paying for this increased speed. [4]. In the announcement, neither Netflix nor Comcast explained the details, except to note that Netflix “receives no preferential network treatment.” [5]. As of now, it appears that Netflix is in a very strong position for the foreseeable future.
However, this may be fool’s gold. There is no guarantee that the Comcast-Time Warner merger will go through. [6]. But even if the deal is approved, Comcast will have much more bargaining power during the next round of negotiations with Netflix. Netflix’s policy was to not pay broadband providers for access to their network, but their recent agreement with Comcast could signal a shift. [7]. Furthermore, last month the Court of Appeals for the District of Columbia limited the FCC’s power to regulate the Internet, giving providers much more freedom in designing their service offerings. [8]. During oral arguments Verizon suggested that it would pursue various service models. [9]. This could lead to different pricing structures which could potentially harm Netflix’s relations with its customer. [10].
This combination of events shows that Netflix must continue to strengthen its content and customer bases to ensure that it will have enough leverage to reach favorable terms with broadband providers.