How Netflix and Google Could Lead the Fight For Net Neutrality | Business | WIRED

Kevin Spacey in the Netflix original series House of Cards. Image courtesy Netflix

As the President’s Day weekend approaches, Americans are preparing to show their patriotism by binge-watching the new season of House of Cards, the hit political drama served up by Netflix. And according to new data from the video streaming outfit, there’s no faster way to watch than Google Fiber.

Google and its broadband loom in the background as potential salvation, since Google’s business depends on an internet where all traffic is free and equal

That’s not just good news for residents of the few cities where Google offers its fledgling high-speed internet service. It’s good news for Netflix itself as it faces a fight over what’s known as net neutrality. After a recent court ruling struck down net neutrality — the principle that all internet traffic should be treated equally — traditional internet service providers appear to be free to throttle Netflix’s streaming video. They might do this in an effort to wring money from the company and to make it more difficult for Netflix to compete with their own movie and TV offerings. But Google and its broadband loom in the background as potential salvation, since Google’s business depends on an internet where all traffic is free and equal.

Anxiety over ISPs slowing or blocking access to Netflix and other bandwidth gluttons has surged since a federal court gutted FCC net neutrality rules last month. In the wake of the ruling, there appears to be nothing stopping Verizon, for example, from charging Netflix a toll to transmit data. Verizon, the plaintiff in the case, recently told The Washington Post: “We treat all traffic equally, and that has not changed.” But legally, it seems, the telecom giant is free to change its mind.

On the surface, Netflix would seem to have no choice but to pay. If would-be House of Cards viewers spend this coming weekend watching the buffering wheel instead of Kevin Spacey, Netflix no longer has a business. And if it does pay up, it may have no choice but to pass those costs onto the viewers. But it may not play out this way. Netflix has its own leverage in the battle over net neutrality, with some possible heavyweight backup from Google.

Netflix: On Demand, In Demand

As Netflix CEO Reed Hastings said as he tried to reassure shareholders that the company wasn’t worried about the recent net neutrality court ruling, broadband providers may stop short of throttling its traffic just to avoid alienating their customers. After all, Netflix is not niche. It’s a very popular service that’s setting the pace for how television will work in the future. Despite its own data showing that its service has slowed on Verizon and Comcast in recent months, Hastings said during the company’s last earnings call that he believed customer demand would trump all.

“Consumers purchase higher bandwidth packages mostly for one reason: high-quality streaming video,” he said. “ISPs appear to recognize this and many of them are working closely with us.”

Because Netflix and other streaming video services are such a big, shiny carrot enticing customers to pay for pricier broadband, it seems unlikely that providers could make more money extorting Netflix on the backend rather than just offering better service — though stranger things have happened on the internet.

Netflix Goes Dark

The demand for Netflix gives the company a big stick to wield against less enlightened ISPs. Its regular release of ISP speed metrics is one way Netflix shames the worst performers. But the company could go even further.

Imagine the hit an ISP would take if it started dialing back Netflix, which responded by pulling itself from the provider’s pipes altogether. When CBS and Showtime went dark on Time Warner Cable for a month, the cable company lost 306,000 TV subscribers. Netflix is hardly without leverage.

Still, in many markets, consumers only have access to one broadband provider. And even in those markets where people have choices, Netflix would be playing a game of chicken. All the major broadband providers could decide — each on its own, of course — that Netflix should have to pay. If the ISPs all set up a toll gate that passes antitrust muster, the options for Netflix would seem to shrink back to one. Especially with its original shows driving its stellar growth, Netflix can’t afford clogged pipes.

Google the Selfish Savior

But here’s where Google could also ride to the rescue. Of all the companies streaming Netflix, Google is the only one where the case for full-on net neutrality makes bottom-line sense. Much like its Android operating system for mobile phones, Google Fiber is not so much a business in itself as a way to feed Google’s core advertising business into more parts of people’s lives.

Of all the companies streaming Netflix, Google is the only one where the case for full-on net neutrality makes bottom-line sense

Some have questioned whether the company really wants to become a full-fledged infrastructure company. But as Fiber expands into more cities, Google is getting good practice at acting like one. If traditional ISPs start to squeeze the throttle too tightly in a post-net neutrality world, Google might feel compelled to lay its own fiber to protect its own business interests. In fact, it already owns fiber lines across the country. If other ISPs start abandoning neutrality, metering the flow of data, Google could set itself apart as the net-neutral alternative, stealing broadband customers from the incumbents and setting Netflix free, among others, in the process.

To be clear, Google wouldn’t take up this fight for altruistic reasons. Many would argue the company’s stance on net neutrality is far from pure. But other recent acquisitions by Google unrelated to networking show it’s a company moving with new aggressiveness into the physical world. Putting its own pipes in the ground could be one more way of advancing that strategy. If one side effect is freeing up the internet for everyone else, including Netflix, binge watching could become one more piece of our everyday lives colonized by Google.