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Net Neutrality Ruling Sends Netflix Stocks Down

Posted by: , 09:17 AEDT, Sat January 18, 2014

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Court of appeals rules against Net Neutrality, analysts say ruling could cause Netflix costs to rise by $1b annually
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The U.S. Court of Appeals for the District of Columbia delivered a deadly blow to Net Neutrality last Tuesday, when it sided with ISP Verizon and gutted the FCC's Open Internet rules.

Under the FCC's Net Neutrality rules, ISPs are forced to treat all legal web traffic equally. Under the new ruling, ISPs can now charge companies like Netflix and Google more to delivery content to customers, due to these companies being responsible for a bigger share of bandwidth used by subscribers - just Netflix and YouTube alone now account for half of all US web traffic during peak usage times. ISPs are then free to degrade the speed of connections to services such as Netflix and YouTube if their parent companies refuse to pay up.

In its ruling, the appeals court believes that there is no need for Net Neutrality regulations as consumers can ultimately choose to change ISPs if one degrades connections to their favourite services. Critics argue that many users do not have a choice, or the available choices might all decide to degrade certain traffic for their own individual benefits.

Analysts estimate that Netflix might be the biggest loser out of this latest ruling, as the company could be hit with nearly a billion dollars worth of additional costs annually, which could force the company to raises prices. The news sent Netflix stocks down 5%, although at least half of these losses have since been recovered.


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