While Netflix, Inc.(NASDAQ:NFLX) may benefit from the Net Neutrality regulation, the effect on ISP providers like Comcast Corporation (NASDAQ:CMCSA) will be quite the opposite in terms of reducing their revenues, and more importantly hindering regulation. On CNBC, American consumer rights advocate and former journalist, John Simpson, and Michel Mandel of Progressive Policy Institute shared their divergent views on the issue.
Netflix, Inc.(NASDAQ:NFLX) has had to pay more to ISPs (Internet Service Providers) like Comcast Corporation (NASDAQ:CMCSA) in order to facilitate smooth streaming to their end consumers, by providing faster access to the internet. The extra buck ensures that Netflix subscribers are given preference when they are streaming.
Mandel argued that Comcast Corporation (NASDAQ:CMCSA) and other companies had been using this extra money to drive innovation which has led to us being in a position that we are today in terms of faster internet access. Thus President Obama urging FCC to regulate ISPs so that Netflix, Inc.(NASDAQ:NFLX) and others do not have to bear the extra cost is going to slow down this innovation process.
” […] The problem is, if you have too much regulation, you will end up slowing down the innovation. Obviously some regulation is needed and you have to give FCC [Federal Communications Commission] a big stick, but what the President has proposed will have the effect of slowing down the boom basically […],” said Mandel.
Simpson, however claimed that the development in the Internet space is due to the fairness that Comcast Corporation (NASDAQ:CMCSA) and others have been operating with which is a salient feature of the Net Neutrality framework. Charging companies like Netflix, Inc.(NASDAQ:NFLX) more is going to change that and that is what is going to destroy innovation in the sector.
” […] The internet has worked so well and has been so innovative precisely because we have operated under the concept of Net neutrality, where the ISPs don’t act as a gatekeeper and all the data goes over and is treated the same way. Many of the larger ISPs want to change that […],” said Simpson.
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