Comcast/TWC Merger: Netflix Announces Opposition, Subscription Fee Increase in Underwood-Like Maneuver
The public fight over Comcast video streaming fees, its possible Time Warner Cable merger, and Netflix just got more heated. On Monday, Netflix announced it would raise subscriber fees (as predicted, but only for new users), and simultaneously voiced strong opposition to the proposed Comcast buy-out of TWC.
In Monday's quarterly letter to shareholders, Netflix announced new users would see "a one to two dollar increase" in monthly subscription fees, "depending on the country," while emphasizing that "existing member would stay at current pricing (e.g. $7.99 in the U.S.) for a generous time period." This hints that even existing members will have to pay more eventually -- whenever Netflix's "generosity" runs out.
Netflix Announces Opposition to Comcast/TWC Deal
The company said the changes in price would enable them to acquire more content and deliver an even better streaming experience, but the fact of the price increase was conveyed with a not-so-subtle subtext (both the price increase and subtext were predicted by us last week).
In the same letter, Netflix called again for "Strong Net Neutrality," meaning protecting Netflix from the kind of interconnect fees that it recently bowed to Comcast on, and officially came out against the Comcast/TWC merger:
"The Internet faces a long term threat from the largest ISPs driving up profits for themselves and costs for everyone else... If the Comcast and Time Warner Cable merger is approved, the combined company's footprint will pass over 60 percent of U.S. broadband households, after the proposed divestiture, with most of the those homes having Comcast as the only option for truly high-speed broadband (>10Mbps).
"As DLS fades in favor of cable Internet, Comcast could control high-speed broadband to the majority of American homes. Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix. The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers. For this reason, Netflix opposes this merger."
More Underwood Games from Netflix?
We've previously commented when Netflix (invented and) called for "Strong Net Neutrality," Netflix has sometimes played its cards like Frank Underwood. And, as The Washington Post noted (along with some industry analysts), Netflix is likely to need a price increase anyway, driven by content costs rather than interconnection fees.
But announcing the price increase while the public's memory of the Comcast interconnection fee deal is fresh is a shrewd, Underwoodian move -- deflecting the blame for higher subscription fees to a much-disliked ISP, who happens to also own a direct rival to Netflix in NBCUniversal's Hulu. Not that Netflix, and others who oppose the Comcast/TWC merger don't have plenty of good reasons.
Comcast posted a lengthy response to Netflix's opposition soon after the shareholder's letter was released. Among its counter-arguments, Comcast argued the fact that internet interconnection and relating fees have "nothing to do with net neutrality," which is true, as long as you subscribe to the traditional notion of net neutrality and not Netflix's new "strong" version.
But it also argued that "97 percent of U.S. homes have access to three or more fixed or mobile providers who offer broadband services consistent with the FCC definition of broadband," which is a bit of a cop-out, since that definition is overly broad and has nothing to do with affordability.
In any case, while Comcast called out Netflix for its blame-shifting pretty successfully, that doesn't mean the opposition to the Comcast/TWC deal won't count the most popular video streaming service in the country in their ranks.
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