Netflix mulls price increase: its revenue and subscribers are increasing US ISPs are charging it for bandwidth
Netflix has continued to criticise US Internet Service Providers (ISPs) over the issue of net neutrality, warning that if the proposed Comcast and Time Warner Cable merger is approved, the new company will be able to use its market dominance to demand greater fees from streaming services.
In a letter to shareholders discussing the firm’s first quarter results, the company’s CEO Reed Hastings and CFO David Wells warn that two thirds of US households would only be able to receive 10Mbps or faster broadband from one company.
“Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix,” says the letter. “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.”
Last month, Hastings lashed out at US ISPs which charge Netflix to ensure additional capacity is available for its users. The company “reluctantly” pays such fees to protect its user experience, but says it will continue to campaign for net neutrality, because interconnection charges could prove prohibitive for smaller firms, stifling innovation on the web.
“The Internet faces a long term threat from the largest ISPs driving up profits for themselves and costs for everyone else,” Netflix declares.
As a result, users on Comcast’s cable network receive a much better Netflix experience and nearly all cable households are capable of receiving great quality streaming video.
Netflix price increase
However AT&T’s fibre network offers lower performance than many ADSL services, with Netflix calling on the ISP to connect directly with Netflix to improve speeds.
But these problems have not prevented Netflix from racking up 48 million subscribers, up from 36 million during the first quarter of 2013, and quarterly revenues of $1 billion. International users account for a quarter of all members and Netflix is planning to accelerate its global expansion plans.
Netflix has invested heavily in new and original content and is investigating the possibility of a price increase of “one or two dollars” for new customers, with existing customers benefiting from a price freeze for a “generous amount of time.”