LOS GATOS, Calif. (AP) -- Netflix's Internet video service has never been more popular, but its future growth could be affected by a federal appeals court ruling that overturned regulations governing online access.
The court decision issued last week concluded that the Federal Communications Commission doesn't have the authority to require Internet service providers to give their customers equal access to all websites. The evisceration of the "Net neutrality" protection raised the specter of Internet service providers, or ISPs, slowing the speed of Netflix's streaming service unless the company paid additional fees to ensure its optimal performance.
If that were to happen, Netflix Inc. might either have to raise the price of its $8-per-month service or settle for lower profits.
Netflix CEO Reed Hastings indicated he doesn't view the loss of Net neutrality as a major threat, primarily because Netflix's service is one of the main reasons that millions of people are willing to pay $60 to $80 per month for high-speed Internet service. He elaborated on his theory Wednesday in response to an analyst's question during a conference call discussing Netflix's fourth-quarter earnings.
QUESTION: What is the impact of the net neutrality ruling last week and what is your expectation for how the ISPs will act in the near-term?
ANSWER: There's some draconian scenarios where some ISPs block Netflix, but we think that is very unlikely. And the most likely scenario, at least in the near-term, is that there is no real change. And the reason is if ISPs, especially major ISPs, were to contemplate blocking Netflix or other services, it would significantly fuel the fire for more regulation, which is not something that they're interested in. So, you know, in the long-term we still need to figure out what it means and how that works out, but I think in the short term, it's very likely that there's no change.