NFLX) - the web-based DVD rental company - is locked in a row with Comcast Corp. (Nasdaq: CMCSA) that could have significant implications for the management of the Internet as a whole.
At the heart of the conflict is Level 3 Communications Inc. (Nasdaq: LVLT), a little-known network operator that handles Netflix content. Comcast has increased the fees it charges Level 3 to carry streaming Netflix videos over its cable network. That decision goes against conventional principles of so-called "network neutrality," under which network operators exchange traffic for free when similar amounts of information flow in each direction. Such exchanges are known as "peering."
Net neutrality also prohibits network owners like Comcast from discriminating against Internet companies by blocking or slowing access too their content.
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Netflix Inc. (NASDAQ:NFLX) has been hamstrung by ISPs like Comcast Corporation (NASDAQ:CMCSA) and Verizon Communications Inc. (NYSE:VZ), which have slowed its streaming service as a negotiating tactic, allegedly to make the company pony up money to retain the ability to serve its millions of clients. That's now over, since the Federal Communications Commission (FCC) has now sided with net neutrality.
But more importantly, there is an opportunity to exploit this legal development.
Netflix Inc. (NASDAQ:NFLX) has been hamstrung by ISPs like Comcast Corporation (NASDAQ:CMCSA) and Verizon Communications Inc. (NYSE:VZ), which have slowed its streaming service as a negotiating tactic, allegedly to make the company pony up money to retain the ability to serve its millions of clients. That's now over, since the Federal Communications Commission (FCC) has now sided with net neutrality.
But more importantly, there is an opportunity to exploit this legal development.
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