Netflix is threatening to rally its roughly 34 million domestic users against a hotly contentious ruling last week overturning laws that heretofore stated all data on the internet should be treated equally.
The ruling by the U.S. Court of Appeals against net neutrality in a case brought by Verizon against the FCC means that service providers can now theoretically charge inflated fees to companies like Netflix, for instance, whose video streaming facilities require more bandwidth.
Translation: the end of net neutrality could hypothetically mean that streaming quality diminishes or that consumers must pay more to ensure that streaming bandwidth remains high.
"Were this draconian scenario to unfold with some ISP, we would vigorously protest and encourage our members to demand the open internet they are paying their ISP to deliver," Netflix pledged in a letter to investors.
At the same time that it is primed for battle, Netflix also expressed doubts that providers would choose to tread "this consumer-unfriendly path of discrimination" given "broad public support for net neutrality." The company also reasoned that it works closely with providers, whose consumers frequently purchase higher bandwidth packages precisely to stream the kinds of high-quality videos that Netflix provides.
But veiled threats against service providers was not the sole purpose of the company's letter to investors, dated January 22, where Netflix also released its fourth quarter earnings. Following the announcement that the company had added 2.33 million domestic users in the quarter, shares surged almost 18 percent this morning.
Netflix also disclosed that it is in the process of rejiggering its pricing tiers after introducing an $11.99 per month option last April that covers four concurrent users. (For $7.99, two users can receive unlimited viewing.) "Since late last year, we have also been testing one-stream and three-stream variants ... at various price points," the company said.
It cautioned, however, that it was "in no rush to implement such new member plans," adding, "If we do make pricing changes for new members, existing members would get generous grandfathering of their existing plans and prices."
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