A World Without Netflix

A helpful argument for the next time that you have to explain to your Facebook friends why Net Neutrality is something important and deserves to be defended.

Thanks John — now I have to explain net neutrality to Grandma again.

The good news is that John Oliver has brought the concept of Net Neutrality back to the public consciousness. The bad news — Net Neutrality is really hard to explain. The REALLY BAD NEWS — the FCC has apparently decided that the concept of a free and open internet isn’t one that should be protected. Which means we have to fight harder than we did to get Title II reclassification. Which, in turn, means you’re going to have to convince your Facebook friends, Twitter followers and assorted relatives who turn to you for IT help that Net Neutrality is something that should be fought for.

Net Neutrality is a notoriously complicated concept mired in policy, technology and business. How do you explain that the power given to ISPs allows them to directly squelch their competition? How exactly do you explain that zero-rating is actually harmful to consumers? Do you get into debates about peering, everyone’s favorite net neutrality rabbit hole? Can you make the average American understand that Time Warner is the reason that they can only get Comcast in their town, and vise-versa? At Tanooki Labs we work with startups and entrepreneurs, so we have an obvious interest in a free and open internet. Without it not only could we not do what we love, we wouldn’t be able to help our partners do what they love and change the world in the process.

Turns out proving the last point is pretty easy because Americans have an innate distrust of large corporations. Of course it makes sense that the biggest ISPs would simply carve up regions among themselves. It’s so Machiavellian it’s almost surprising that HBO hasn’t created some original programming around the concept.

But the first two points are more difficult. This is mostly because on the surface a policy like Verizon’s “FreeBee Data” and T-Mobile’s “BingeOn” seem great for consumers. “I can watch all the Netflix I want without it counting towards my data plan? Awesome! Consumer win!” Unfortunately, the truth of the situation is more complicated. But after years of getting crazy internet bills for going over their bandwidth cap the American consumer really just wants to not feel like they’re getting screwed.

But of course, they are.

Let’s do a little alternative history, shall we?

What if your cable company was the only way you could watch video? Would kinda suck, no?

The year is 2007. A small startup called Netflix has spent the last ten years growing as a mail-order alternative to industry giant Blockbuster. Founders Reed Hastings and Marc Randolph have a vision of the future — that streaming video will allow for instant distribution of content. The new model would be built on top of the existing Netflix subscription so users will be able to view as many features as they want for the same price. Netflix’s market position means they’ll be able to negotiate titles from all the major film and television distributors. Netflix users would be able to watch films from every film studio all in one place. A serious win for the consumer. Netflix will have to sign expensive licensing deals with each distributor, but pivoting to streaming only means warehouses and other fixed costs can go away. Hey — this could actually be pretty great!

Unfortunately, there is no free and open internet in this version of 2007. ISPs are able to throttle data at will and there is no concept of “all data is equal.” Shortly after seeing a quarter of moderate success by the Netflix team Comcast, TimeWarner, AT&T and Verizon decide to launch their own streaming video services. These services come with agreements with their content producers so users only have access to the productions created or distributed by their ISP. Of course Netflix isn’t prohibited from operating — but their streaming service will count against your data cap while each ISP includes the data consumed by their service for free. And the ISP provided service will of course be free. And the shows on Netflix always seem to be buffering. But the MSNBC channel looks great on my ComcastTV — too bad that I can’t get The Weather Channel though…

Of course this service isn’t as good, and the consumer doesn’t have nearly the choice that they’d have with Netflix but hey, free!

This could have been Netflix’s future. via BlueMint, via Wikimedia Commons

After six months of trying to devise a way to overcome the obstacles in this unequal system Netflix returns to its roots as a mail-order DVD rental company. The company follows Blockbuster out of business in the winter of 2013. Then with competition firmly out of the way, ISPs begin charging for their streaming video service.

Seeing what the cable companies were able to accomplish — Jeff Bezos pulls the plug on the nascent Amazon Video. Countless startups lose funding as investors realize that there is nearly zero chance that a competitor to the ISP would ever generate traction in the market.

In this world there is no Transparent to win the Golden Globes. House of Cards is produced and distributed by a traditional network who strangles Kevin Spacey and David Fincher’s vision. The show is a mediocre success for both the duo and the network. There is no Orange is the New Black to bring the prison industrial complex to the front of the public’s mind. The world never finds out that Rory Gilmore was a terrible journalist, we never lose Barb to the Upside Down and the Full House gang never gets back together.

These might seem like trivial things, but the seismic change that Netflix ushered in wasn’t just the ability to binge watch old episodes of Gilmore Girls. It ushered in a new version of the auteur in television and changed the way studios and production companies made movies and television. Netflix’s ability to determine what people want to watch through intense data analysis also led directly to a new type of season that didn’t require a pilot season and created jobs that wouldn’t have existed previously. And audiences were introduced to stories and characters that would have never been touched by major networks (Jessica Jones and Luke Cage jump to mind) because Netflix knew that people would want to watch them.

The impact of having a startup like Netflix crushed in its infancy is staggering when you step back and look at it. And the precepts of Net Neutrality allowed for all of that to happen. That’s what we lose when the free and open internet is threatened. The next startup that’s squashed by a partial internet might be a national registry for cancer patient data. It could be a self-driving technology that would prevent 80% of fatalities caused by human-error. It could be anything that can’t pay the ISP a bounty for access to the pipes because a market incumbent is willing to pay double rate to keep them off. Or because the ISP has a competing business.

At Tanooki Labs our partners are the startups who are out there changing the world. We’re lucky enough to spend our time helping entrepreneurs bring their visions to life. We can do that in large part because the internet is open, bytes are bytes are bytes and data is as it wants to be. Free.

To do your part (and we all have a job to do in this fight) head over to FCC.gov and comment on the proposal. And support organizations that are fighting to keep the internet open such as the EFF and the ACLU. It’s not over yet, no matter how dire it seems.

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