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Netflix says it still supports Net neutrality, despite CFO's comments

Netflix's recent deal in Australia and comments from its CFO suggested it was backtracking on its pro-neutrality stance.

In case you heard otherwise, Netflix still supports the Federal Communications Commission's move to regulate the Internet like a public utility.

"Netflix supports the FCC's action last week to adopt Title II in ensuring consumers get the Internet they paid for without interference by ISPs," Anne Marie Sequeo, a spokeswoman for Netflix, said Thursday. "There has been zero change in our very well-documented position in support of strong Net neutrality rules."

Netflix had to explain itself a day after CFO David Wells, speaking at a Morgan Stanley investor conference in San Francisco, implied he wasn't happy with the FCC's vote to regulate the Internet under Title II of the 1934 Communications Act. "Were we pleased that it pushed to Title II? Probably not," Wells said.

The FCC voted last week to reclassify Internet service as a Title II service under the Communications Act. Supporters say that change will help the FCC withstand legal challenges from telecommunications companies, which fear the the agency could dictate rates they can charge. Companies like Netflix have been especially concerned that, without strong Net neutrality rules, service providers could create Internet "fast lanes" -- essentially charging fees for preferential treatment.

Wells' comment seemed to contradict Netflix's year-long efforts to ensure Internet service providers won't charge it -- or other content companies -- additional fees to deliver their high-bandwidth traffic.

Not so, according to Sequeo, who said Wells' remarks were taken out of context.

To further clear up confusion, she posted a blog Thursday that offered a longer excerpt of Wells' statements:

"We were hoping that there might be a non-regulated solution," Wells said. "But it seems like companies that are pursuing their commercial interests, including us, have to arrive at something like that."

Netflix is also "super pleased" that the FCC added a provision allowing the agency to resolve disputes between companies like Netflix -- which deliver large amounts of Internet traffic -- and local broadband networks, such as Comcast and Verizon. Last year, Netflix was embroiled in bitter negotiations with Comcast and Verizon, which each wanted the company to pay a fee to connect to their networks and deliver streaming video to broadband subscribers.

Netflix argued it shouldn't have to pay a fee to deliver its traffic to customers already paying for Internet access. Ultimately, Netflix agreed to pay the fee but lobbied the FCC to look more closely at these deals.

Wells' comments followed after Netflix announced that it has partnered with Australia's second largest ISP, iiNet, to allow broadband subscribers to view the soon-to-launch Netflix service without eating into customers' data caps. Some critics have described the deal as hypocritical because that practice wouldn't be allowed under the new Net neutrality regulations that Netflix fought for.

Netflix's explanation: US and Australian broadband markets are totally different, said Sequeo. Because data caps on broadband services are common in Australia, Netflix has to strike such deals to attract consumers.

"We are strong advocates for Net neutrality and don't believe data caps are good for consumers and the Internet generally," she said. "That said, such arrangements are common in Australia and we won't put our new members at a disadvantage to those of rival services."

Net Fix

The notion of Net neutrality means all Internet traffic gets treated the same. But a deep divide exists on what rules -- if any -- will fuel innovation and protect US consumers.

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