Sunday, March 16, 2014

House of Cards Season 2 Shuffles the Deck for Net Neutrality

House of Cards recently had its' Season 2 premiere. Netflix, the company that produces the series, is under fire from Internet Service Providers (ISPs).

Frank Underwood and his wife Claire are out jogging in the night. In their black jogging suits they meld into their dark surroundings, only occasionally illuminated by lamp posts that line the path they are taking. The couple's pace speeds up as they go downhill from a crest on the path. Pausing at the bottom of this dip, the newly named Vice President of the United States smiles at his confidante. Then they're off again. Fade to black. Cue the House of Cards opening montage.

Scenes like this make Netflix's remake of the British House of Cards compelling television. Frank Underwood is introduced to us in Season 1 as a House Majority Whip whose job he seeks to transcend. Early on in this season we learn where Frank's values lie. He's not looking to make mountains of money. No, to Underwood power is the only Holy Grail in life.

Washington's most visible seat of power is the office of President of the United States. Unfortunately for Frank, that job is currently occupied by Garrett Walker. After Walker reneges on a promise to make Frank his Secretary of State, Underwood begins a covert campaign of lies, back channeling, backstabbing, bribery, intimidation, and every other means available to him in order to: a) Place his own people in Walker's administration so that Underwood can wield greater influence within it, and b) Undermine and humiliate that administration so Frank can propel himself further up Capitol Hill's chain of command.

The story of an ambitious man who would seek power at any cost is a story that has been told before; that doesn't diminish any of the story's power here. Comparisons to Othello and Richard 3 have been made by HOC cast members in interviews. Like Iago and Richard, Frank Underwood is a villain whose hunger for the throne knows no bounds.

Now that Seasons 1 and 2 of this dark as midnight political drama are over, the next installment of HOC will be the third act. For anyone familiar with Othello and Richard 3, you know the villain is undone in both. A position gained through deceit and carefully managed webs of lies is bound to fall like, well, a House of Cards.


There is a comparison to be made here - like the television series it created, Netflix the company is about to enter its' own third act. The one we've just witnessed has seen it become the world's most popular Internet television on demand streaming service. At the end of the second act, the company had moved from just obtaining licenses to stream television series and movies created by others, to funding its' own programs, Orange is the New Black and House of Cards being two examples.

In early January of this year the story took a twist. A ruling in the United States Court of Appeals, District of Columbia, struck down two key provisions of the principle of Net Neutrality. Although there are many definitions of Net Neutrality, one of the most commonly understood is that it means “non discrimination.” In theory all data packets sent from server to server on the Internet are treated in the exact same manner from the server to the client and back again. It shouldn’t matter if the consumer is watching Netflix or YouTube, searching on Google, or reading an article on the New York Times website.

The provisions struck down by the U.S. Court of Appeals are: a) that Internet Service Providers (ISPs) are prohibited from blocking high bandwidth traffic such as Skype and Netflix on their networks and b) ISPs cannot discriminate against these services by putting them into a ‘slow’ lane while giving priority to data packets from other servers.

Craig Aaron, President and CEO of Washington, D.C. based Free Press said when the ruling was released, “the biggest broadband providers will race to turn the open and vibrant Web into something that looks like cable TV. They’ll establish fast lanes for the few giant companies that can afford to pay exorbitant tolls and reserve the slow lanes for everyone else.”

Such a reality could seriously damage Netflix’s business. If the flow of data from the company’s servers to end consumers is ‘throttled’ or slowed down, customers may abandon the service. By slowing down Netflix traffic to an extent that streaming becomes impossible, broadband providers could make it prohibitively difficult for the company to continue with its’ current business model.

In February, Netflix signed a deal with American broadband provider Comcast Corp. for an undisclosed amount that would see Netflix traffic be streamed to Comcast customers at faster speeds. There had been reports that Netflix’s streaming speeds on Comcast from October 2013 to January of this year had decreased by as much as 27 per cent.

This is the issue that could really spell trouble for Netflix. To deliver their Internet streaming television service to consumers, the company must use the 'pipelines' provided by broadband companies and ISPs. If those ISPs want to throttle Netflix's content now that Net Neutrality provisions have been tossed out the window, what's to stop them?

Business articles have speculated that deals with AT&T and Verizon Wireless will be forthcoming. Every deal of this nature that Netflix makes shows they're worried about the vulnerable position they find themselves in.

This raises an important question: What is there to stop broadband providers from charging Netflix huge sums? The business relationship is a dependent one; the horse must go to water in order to drink. So too must Netflix rely on ISPs to carry large amounts of data 'downstream' to customers.

Could a buyout by one or more of the U.S. cable giants and / or ISPs be in Netflix's future? Will Frank Underwood fall hard and fast from his seat of power in the White House? Only time will tell.

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