Netflix says there's a big loophole in proposed net neutrality rules

Netflix is asking the FCC to look a little closer at its proposed net neutrality rules, warning that there's a major loophole that would allow Comcast-especially if it's NBCU merger is approved-and other major cable and satellite companies a major advantage in giving their own content a delivery edge. And, Netflix says, that would create a major hurdle for its business and keep its nascent, but growing, streaming business from gaining more than a foothold in the online video delivery campaign.

The company said the FCC's language in the "managed services" portion of its proposed rules needs to be readdressed and strengthened.

"If left unchecked, the ‘managed services' category could engulf the Commission's open Internet policies altogether. As such, the Commission must carefully circumscribe the network operators' ability to exempt certain services from the openness rules by classifying them as managed services," Netflix wrote in its filing to the FCC.

Cable companies are seeing services like Netflix, which often are delivered "over-the-top" on devices like Sony's PS3 and other gaming consoles, on Blu-ray players and, increasingly, on Internet-connected televisions, as a major threat. Increasingly, consumers are opting to add OTT devices rather than invest in more services from cable and satellite providers. Netflix and other OTT services also have prompted some consumers to drop their cable and DBS services entirely. A recent study said some 8 percent of high-speed Internet users planed to cut the cord to pay television, although critics of the data have said it's more likely that consumers will add OTT delivery in addition to their current cable or DBS service rather than drop pay TV entirely.

For more:
- see this Washington Post blog

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