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Netflix CEO Reed Hastings
Wikipedia's textbook definition of the principle of net neutrality goes like this: " Internet service providers and governments should treat all data on the Internet equally, not discriminating or charging differentially by user, content, site, platform, application, type of attached equipment, and modes of communication."
Put another way, net neutrality aims to maintain the Internet as a civil sort of Wild West where people get to share/send/make nearly anything they want, and to have that data be considered equally important to all the other data that computers push around the Internet. Your Christmas e-card to Grandma is prioritized right alongside Amazon's shipping notifications and the New York Times' homepage.
It might not strike you as an especially contentious idea, but a DC court on Tuesday ruled that " the FCC has no authority to enforce Network Neutrality rules, as service providers are not identified as 'common carriers.'"
In short, the FCC can't require Internet service providers to treat all data equally. And when there's a financial motivation to treat some data as unequal, it's only a matter of time before that becomes the case.
Data rights advocates are up in arms over the ruling, but it also has some unpleasant implications for our beloved friend Netflix.
USA Today reports that the net neutrality ruling may leave Netflix exposed to higher operating costs. Because there's no legal impetus for Netflix's video streams to be considered "as important" as any other data transmission, Internet service providers have the ground to charge Netflix more money for transmitting such bandwidth-heavy content to so many people.
The report cites a potential $75 million to $100 million increase in Netflix's content delivery costs this year — a cost that would be immediately forgotten if the court system had found the opposite ruling.
Netflix shares fell 2.3% to $330.11 yesterday.
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