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Netflix, cable disputes and shake-up to net neutrality rules sum up the week

It has been a week of intense drama with the F.C.C. proposal for new rules on net neutrality which opens up the ability for an Internet service provider to charge higher fees to stream faster to a particular Internet distributor. Amidst those announcements, Netflix cried foul on Comcast and accused the provider of slow streaming rates and poor video quality from the Comcast connection, reports the New York Times yesterday.

Special Screening Of Netflix's "House Of Cards" Season 2- Red Carpet
Photo by Jason Merritt

These accusations from Netflix come after the big deal in February when Netflix paid off Comcast for higher speeds and quality. Comcast senior vice president of Corporate and Dial Communications for Comcast posted a blog on Friday that it was Netflix’s commercial transit decisions responsible for poor quality.

Netflix’s business decision has been to pipe a majority of its traffic through a single transit provider, Cogent, instead of using the availability of other providers. Netflix has had problems in delivering its content and has complaints from viewers, which opens up Netflix to criticism on delivery.

This conflict of words comes after Netflix sent a letter to its shareholders that Comcast-Time Warner merger would allow a monopolistic large service provider and the ability to control streaming and raise fees to burden the consumer. Comcast responded that the claims are inaccurate.

Amidst this uproar Netflix had signed on with three main cable companies to stream its video service as its own cable channel. It may come to a cable box if you have access to one of three cable companies, CN Communications, Atlantic Broadband and Grande Communications.

Netflix will be considered just like any other channel of cable-TV but it relies on high-speed Internet to deliver the video program to a subscriber of the cable company. “It’s a watershed moment,” according to David Isenberg, Atlantic's chief marketing and strategy officer and it signals a new generation in TV viewing much like HBO did in its beginnings in the ‘70’s.

Owning content and the ability to control its pipeline to the consumer is a lesson learned by HBO in the decade of the ‘90’s. HBO learned it was middleman to distribute movies but chose to develop content and provide TV shows in order to make money. It did this through its highly successful series like "Sopranos" or “Sex and the City”. The newest entry is through Amazon Prime HBO’s “Game of Thrones” and “True Detective”.

Netflix and Amazon have learned from HBO which has led Netflix to distribute the wildly successful “House of Cards” and Amazon is trying to make it with “Alpha House”. This road for Netflix and now Amazon comes at the critical fork in the road when the F.C.C. is adding its new rules proposal since the federal district court ruling last Feb. threw out the rule that the Internet was governed the same as the utilities of telephone or electric companies.

The New York Times posted Thursday that the F.C.C. will allow an Internet service provider the ability to charge a higher rate for faster speed in the pipeline to the consumers’ device. The basis of the F.C.C. thinking on the new rule is that once a provider like a Comcast or Verizon makes an agreement with fee price to provide streaming content to a Netflix, Amazon, Google or Disney, the F.C.C. would review the agreement to determine if the terms are commercially reasonable.

Free Press President and CEO Craig Aaron stated in response to the F.C.C. announcement that, “with this proposal, the FCC is aiding and abetting the largest ISPs in their efforts to destroy the open Internet. Giving ISPs the green light to implement pay-for-priority schemes will be a disaster for startups, nonprofits and everyday Internet users who cannot afford these unnecessary tolls."

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