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ISPs now have free rein to gouge Netflix thanks to net neutrality case [updated]

Updated Jan 15th, 2014 12:37PM EST
Net Neutrality Verdict Analysis Netflix

For every winner there’s usually a loser and in the case of the big net neutrality verdict handed down on Tuesday, the biggest loser might not be the Federal Communications Commission. Bloomberg talks with several analysts who believe that Netflix and other other-the-top content providers look like the biggest losers in the net neutrality ruling because now ISPs will be able to charge them extra money to make sure that their traffic is given priority over ISPs’ own services.

“Goodbye, open Internet,” Wells Fargo analyst Jennifer Fritzsche tells Bloomberg. “There’s definitely a risk that Netflix customers will have to pay more, though it will probably take at least a year for it to take effect.”

In fact, Verizon attorney Helgi Walker tells Bloomberg that her client is already exploring ways to charge Netflix, Hulu, Amazon and other so-called “bandwidth hogs” more money to guarantee that their videos get first-class delivery. Wedbush analyst Michael Pachter estimates that ISPs could charge Netflix around $0.80 per user for standard definition video streaming and a whopping $4.80 per user for higher-definition video streaming.

“The correct capitalist response would be to charge the end user, but no vendor wants to go to the customer to hammer them if it can be avoided,” Pachter tells Bloomberg. “The elimination of net neutrality means they can go to Netflix and squeeze them instead.”

UPDATE: A Verizon spokesperson contacted BGR via email to point out some inaccuracies in Bloomberg’s report. Helgi Walker’s comments referenced above were made last year in court during arguments for the case, and according to Verizon, she never used the term “bandwidth hogs” or referenced any of the above-mentioned companies by name. The email states that Walker told judges that “Verizon would like to ‘explore’ opportunities related to a two-sided marketplace,” and nothing more.

Prior to joining BGR as News Editor, Brad Reed spent five years covering the wireless industry for Network World. His first smartphone was a BlackBerry but he has since become a loyal Android user.