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FCC Vote on Net Neutrality is Great News for Netflix Inc (NFLX) and its Fans (and Investors)

The internet will be rechristened as a utility by the FCC today. In her appearance on CNBC’s Tech Bet, Senior Editor Maggie Reardon expressed that including Netflix, Inc. (NASDAQ:NFLX), the FCC’s step should prove beneficial for everyone.

Netflix Inc logo (NFLX)

“Net neutrality is a concept that all traffic on the internet is treated equally. So, that means that your broadband provider – whether it’s a wired broadband or a wireless provider – can’t block or slow down traffic. It also means that that provider can’t charge companies like Netflix an extra fee for priority access,” Reardon said.

Netflix, Inc. (NASDAQ:NFLX) holds net neutrality very dear. Netflix, Inc. (NASDAQ:NFLX) paints a picture of this being a fight that they fight for consumers’ cause but they are sure not unaware that being a video streaming company which uses up great amounts of bandwidth, that their success could depend on it. Though the FCC’s vote on net neutrality would make Netflix, Inc. (NASDAQ:NFLX) feel like a winner, Reardon declared debate and lobbying was not over by any means and she foresaw the next battle being fought in the courts. The new rules empower the FCC to monitor, and in case of a complaint, probe the activities of internet service providers such as Comcast Corporation (NASDAQ:CMCSA) and Verizon Communications Inc. (NYSE:VZ).

“These rules basically will prevent blocking and slowing down of traffic. There will be no priority lane. And the big change here is a legal one. It’s going to reclassify broadband as a utility and that is something that has got Republicans and broadband providers really riled up,” Reardon said.

Apparently internet service providers such as Comcast Corporation (NASDAQ:CMCSA), Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) have fast lanes, so if they were to be discriminatory they could slow down traffic to rip off video streaming companies such as Netflix, Inc. (NASDAQ:NFLX) by upselling these fast lanes.

“The real question here is how it’s going to affect broadband companies like Verizon or Comcast. They say this Title II switch would be a disincentive for them to invest in their networks. It could lead to higher taxes and fees to consumers.  There are going to be law suits after this for sure. The broadband companies are not going to sit by and let this happen. It’s just a matter of when those law suits are going to be filed,” Reardon said .

FCC’s 2010 net neutrality rules were repealed last year by a federal court after an appeal by Verizon Communications Inc. (NYSE:VZ). With the help of the pro net neutrality approach of the Obama administration, net neutrality is being reinforced by re-branding broadband as a utility and bringing it under the FCC’s control. Today’s vote brings yet-to-be-seen consequences for major internet service providers such as Comcast Corporation (NASDAQ:CMCSA), Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T). With a drop in their TV subscriptions and their inability to control internet from the background, the internet services providers could bear serious loss if they do not transfer some effects of that loss to consumers. It could also discourage them to further invest in their infrastructure, which may even lead them to think about pulling out to avoid risks.

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