Published January 22, 2013
It’s the ultimate picture, and it’ll cost you -- even if you don’t watch it.
At the 2013 Consumer Electronics Show, Netflix announced Super HD, an immersive theatrical video format that looks more lifelike than any Web stream, even competing with Blu-Ray discs. But there’s a costly catch.
To watch the high-definition, 1080p movies when they debut later this year, you’ll need a specific Internet Service Provider (or ISP), one that has negotiated a Super HD deal with Netflix. Those on Cablevision or Google Fiber are in, but Time Warner and a host of smaller providers have yet to sign on.
But regardless of whether you subscribe to Netflix, you may end up paying for it, said Fred Campbell, a former FCC legal adviser who now heads The Communications Liberty & Innovation Project think tank.
“Instead of raising the price of its own service to cover the additional costs, Netflix wants to offload its additional costs onto all Internet consumers,” Campbell told FoxNews.com. “That’s good for Netflix and bad for everyone else in the Internet economy.”
Campbell told FoxNews.com that Netflix doesn’t charge ISPs for the special pipeline Super-HD requires and even provides a network appliance to ISPs to facilitate it. Yet most will have to pay for the faster network bandwidth, he said, and they will pass these costs down to every Internet user.
“If ISPs raise prices due to the extra costs of Netflix's new service, ISPs would have to raise prices for all subscribers,” Campbell told FoxNews.com. In other words, Time Warner can’t pass on the cost only to Netflix subscribers; every Time Warner customer would have to pay more.
“Federal regulation prohibits ISPs from raising prices only for Netflix subscribers,” he said.
Super-HD’s super-privileged access has the Internet providers crying foul. Time Warner lashed out with a public statement, saying Netflix was using preferential treatment. The Internet is supposed to be free and open to all, after all.
“While they call it ‘Open Connect,’ Netflix is actually closing off access to some of its content while seeking unprecedented preferential treatment from ISPs,” a company spokesman told industry magazine Multichannel News.
Meanwhile, some technology analysts stand with Netflix, saying Open Connect is the only way to usher in a new age of high-end video streaming. Super HD competes with Blu-Ray discs and HD cable; without it or a similar delivery technology, Web video will always fall far behind in quality.
“Netflix wants the fastest pipes for their premium services,” Roger Kay, an analyst for Endpoint Technologies, told FoxNews.com. The idea of “free Internet” has been a plague for content providers, he said, noting that a “freemium” model makes more sense: Everyone gets access, but you pay more for quality.
Roslyn Layton, a spokeswoman for the Copenhagen Institute of Technology who studies video streaming technology, says there are two sides to the issue, and no clear answer. Netflix accounts for 30 percent of all Internet traffic in the U.S., she said, yet only 25 million subscribe to the service. Of the 250 million Internet subscribers in the U.S., 10 percent use the most bandwidth.
Layton says Netflix is just building a “content delivery network” similar to Akamai, one of the leading companies that speeds up Internet video for companies like Apple.
But things get dicey when a company like Netflix wants to improve video quality. They need ISPs to deliver the content. Yet the ultimate goal is to deliver HD video as quickly and cheaply as possible. That’s why both Microsoft and Yahoo stopped supporting net neutrality five years ago, Layton says. In 2010, both Google and Verizon stopped supporting net neutrality on wireless carriers. Netflix may support it now, she says, but that will change when the company wants a bump in quality.
Tim Hanlon, a digital media consultant at The Vertere Group, says “bandwidth hogs” like Netflix should pay more for using the infrastructure than smaller companies. Everyone can drive on the highway, after all, but an 18-wheeler with a commercial load has to pay more in fees.
“It makes sense to create some sort of VIP lane for certain kinds of network traffic that enables high-density things like audio and video to have higher priority in delivery speed and quality,” he told FoxNews.com.
For Campbell, the problem is that Federal regulations prevent ISPs from charging Netflix subscribers for the costs of its VIP lane.
“There will be higher prices for everyone and the potential for fewer choices of video streaming services in the future as Netflix consolidates its dominance in the market,” he says.
Netflix did not respond to numerous FoxNews.com phone calls and emails for more information.