Netflix is in a pickle. They’re in the middle of a titanic struggle to prevent AT&T and DirecTV from merging. If the merger were to happen, Netflix’s business will take a heavy hit.
Netflix defends it’s concerns. They said to the FCC, “If AT&T is able to slow the development of the OVD industry, either by foreclosing access to broadband customers or imposing discriminatory data caps, AT&T would be able to preserve its market advantage by slowing or even reversing the shift toward competitive online video offering and away from bundled video/broadband offerings.” In the past, AT&T has forced Netflix to pay them in order for Netflix to use their network. If Netflix didn’t pay, they would face lower speeds.
In response to Netflix, AT&T said to the FCC, “[I]t is clear that this transaction creates no economic incentive for the merged firm to harm OVDs. While Netflix mischaracterize[s] their commercial peering disputes as evidence of such an incentive, the record does not support those claims. As one network analyst has explained, ‘Netflix chose to create, and use paths that [it] knew were congested, simply because they were cheaper than using paths that were less congested.’ This strategy apparently overwhelmed Netflix’s chosen low price providers, causing congestion and impacting service quality for its customers.”
Even though Netflix appealed to the FCC on the grounds of net neutrality, the FCC will not place a ban. Instead, it will allow the companies to file complaints concerning the payment requests.
Should Netflix users be concerned? For now, it seems that the merger is in question. It was not too long ago when a similar merger almost happened between Comcast and Time Warner Cable. The FCC shut that one down. Will they make an effort in this situation? What do you think of this merger? Has AT&T been unfair? Let me know what you think in the comments.