How Netflix almost ruined EU Net neutrality

Now when the debate sparked by Netflix CEO Reed Hastings’ blog post on net neutrality “Internet Tolls And The Case For Strong Net Neutrality“ has died down and the European Parliament have voted in favour of Net Neutrality and against specialised services, I’d like to take the opportunity to vent my grief a bit. What I say in the header is a tall order, I know. But it is not far off.

First of all, as you might know, when I discuss companies or persons in my blog I don’t mention them by name. This is for several reasons, first of all there is an element of the Golden rule, second the industry is rather small and I hope to continue work in it, and, in the case of Netflix, I don’t want to come across as a disgruntled almost employee. Although, I remain rather unimpressed by Netflix’ EU hiring practises. Further, I think that Netflix doesn’t take their responsibility when it comes to making it simple to be legal on-line seriously. Nor do they go far enough in their actions. This time I felt it was warranted to mention names simply because anything else would have complicated the text beyond means.

But I digress.

In my everyday job I work as Policy advisor to a Member of the European Parliament concentrating on issues like net neutrality, e-commerce, telecommunications, cloud computing to mention a few. This is why I can speak with some certainty of this process since I was involved behind the scenes. And yes, I am a staunch defender of Net neutrality.

I am not going to go into the debate at heart here. The point I hopefully will make is to highlight a view that I often see from US-based companies with EU branches; there is seemingly little or no insight that points of view put forward in the US might affect EU legislation. They also join forces with their EU corporate counterparts in not entirely realising that the European Parliament actually is a parliament with powers and influence.

In his post Mr Hastings made a case for net neutrality and against specialised services, but instead of business, he based his argument on fees for traffic. In his text Mr Hastings state that if telecommunications companies get their way we might not see a new Skype or indeed Netflix again because the fees charged would stop any new ideas from being implemented. Had he stuck to this argument I don’t think there had been any debate; no one wants to be accused of stifling competition, hamper value creation and stop new business from happening.

”Net neutrality (also network neutrality or Internet neutrality) is the principle that Internet service providers and governments should treat all data on the Internet equally, not discriminating or charging differentially by user, content, site, platform, application, type of attached equipment, and modes of communication.” The term was coined by Columbia media law professor Tim Wu.

But in any case, the impact this ill-timed post had across the Atlantic, where a vote on Net neutrality and Specialised services was taking place, was that it gave the telecommunications companies in Europe wind under their wings and they started to lobby for their point of view; that there is no such a thing as a free lunch, and users must pay for bandwidth. Nothing of which is questionable; but it isn’t the question at hand. Rather the real issue is freedom of doing business. Weaker Net neutrality would make it more difficult to run any business on-line. If the vote had gone a different way Mr Hastings could have had to seriously review his expansion plans for the EU. Is that really what he wanted? This attitude towards the European Parliament is something I frequently see amongst companies, EU & US alike. It is getting better in EU companies, but many US companies whose activities’ spans both sides for the Atlantic seems blissfully unaware of that the European Parliament actually produce legislation that have impact on their business. And if they consider it, they seem to think it is some toy Parliament and when you want to lobby it you just send employees with little or no leverage with the C-suite. Or a VP is coming and is expecting the Parliamentary calendar will change to accommodate them.

Is there really no-one within Netflix that has any view on legislative developments outside the US? Because, the state of net neutrality in the EU will affect Netflix business. Is there no-one that could have advised Mr Hastings to hold off the post to a better time? That maybe a better way to push net neutrality is to speak about preserving, maybe even augmenting, freedom to do business? And is there no one that can enlighten him about the importance of the European Parliament? It governs over 500 million citizens which makes it one of the biggest parliaments in the world. 80% of national EU legislation emanates from the European Parliament. OK, someone say; this post was published on Netflix USA Canada blog and was not at all aimed at EU. This is correct and true, but even if all business is local, corporate standpoints for international corporates rarely are. And if someone high-profiled like Mr Hastings speaks on a relative controversial issue this will have repercussions far beyond what one had identified from the beginning.

The Telecoms Single Market proposal (the proposal that was voted on) will now be reviewed by the Council of the European Union. The Council representatives are expected to adopt a final position on the Telecoms regulation later in 2014. Personally, I hope that the Council maintain the safeguards to protect net neutrality and prohibit network discrimination in Europe. This includes ensuring that this principle can be effectively enforced. Achieving this has not been easy, and in case Netflix wonders, the battle isn’t won. In in the meantime, in the relative vacuum that will be during the election period, we are certainly not helped by blog posts of the likes of Mr Hastings.

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