Is The Free Market ‘Subsidizing’ Netflix?

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"Is The Free Market ‘Subsidizing’ Netflix?"

Harold Ford, Jr and John Sununu teamed up to pen an extremely strange op-ed that I think is supposed to be an argument against “net neutrality” regulations. The crux of what they have to say, however, is a complaint that Netflix is “a service that forces tens of millions of non-customers to pay for something they never use.” How so? Well, it’s streaming video services uses a lot of bandwidth. The bandwidth isn’t free, so someone is paying for it. And according to Ford & Sununu “That ‘someone’ is the millions of broadband subscribers, whether or not they are Netflix customers.”

That’s true enough, but it has nothing in particular to do with Netflix. I get my home Internet from Comcast. Some Comcast customers use an above-average amount of network capacity, and we benefit from the fact that we pay the same price as Comcast customers who use a below-average amount of network capacity. AT&T and other wireless companies address this by charging customers who use a lot of data more than they charge customers who want a more slender plan. Comcast hasn’t implemented this for its wireline customers, presumably because they think they would make less money that way. Or maybe they actually would make more money with tiered pricing but just haven’t tried it yet because they’re lazy. Either way, there’s no obvious reason to regard the fact that Comcast chooses to sell all-you-can-eat broadband plans as an unfair subsidy to Netflix. Indeed, it’s difficult to see what the policy issue here is supposed to be. Do they want regulators to create a cartel? Why?

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