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Netflix CFO: We Would Have Preferred a 'Non-Regulated Solution' to Net Neutrality

4 Mar, 2015 By: Erik Gruenwedel

Netflix CFO David Wells

Be careful what you wish for. That’s the message Netflix CFO David Wells appeared to convey in response to the Federal Communications Commission’s Feb. 26 vote to reclassify broadband as a utility under the aegis of an 81-year-old act of Congress.

Speaking March 4 at the Morgan Stanley Technology, Media & Telecom confab in San Francisco, Wells avoided talking about the FCC ruling until it was brought up during the Q&A session of the presentation.

Wells said management has been pleased over the past year to be able to raise the profile of net neutrality from a narrow scope issue of equality for all Internet traffic to so-called “strong net neutrality” and eliminating the ability of ISPs to charge interconnect fees to ensure faster streaming speeds.

“Were we pleased that it pushed Title II [of the Communications Act of 1934]? Probably Not. We were hoping there might be a non-regulated solution to it,” Wells said.

He admitted that companies such as Netflix and ISPs with competing commercial interests should be able to find common ground and compromise. At the same time, Wells said he appreciated now having regulatory muscle when arguing against questionable additional interconnect fees when also paying market bandwidth rates.

The CFO said that there exist studies indicating how much the Internet has become a utility. He said there are consumer surveys where respondents said they would forgo purchasing grocery items such as milk rather than drop broadband service.

“That’s a pretty strong indicator you got something that has become a utility. In our opinion, it was very important to protect that notion,” Wells said.

At the same time, he defended Netflix’s recent decision to ink a deal for direct access to an Australian cable operator’s subscribers. He said absent strong regulation, Netflix would not put its subscribers in a position of experiencing sub-par streaming.

Netflix is launching service in Australia and New Zealand March 24.

“We feel consumers and society is better served with a strong net neutrality bucket,” Well said.

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