How Netflix Keeps Finding Itself on the Same Side as Regulators

• Whatever the outcome of the latest proposed mergers and acquisitions in the media industry, a clear winner has already emerged, and it’s not even a party to any of the deals: Netflix, the streaming television pioneer.

To many in the cable and broadband businesses, the invisible hand ofNetflix has been apparent in the failed Comcast-Time Warner Cablecombination; in likely restrictions on the merger between AT&T and DirecTV; and in the Obama administration’s embrace of net neutrality, to cite just three prominent examples.

• Indeed, the corporate philosophy of Netflix, which was once thought to be outgunned in Washington by the East Coast media conglomerates and their vast lobbying forces, now seems so pervasive that the Federal Communications Commission, or F.C.C., is being referred to by some media executives — half-jokingly and half-enviously — as the “N.C.C.”

But Netflix is hardly the only corporate beneficiary. To varying degrees, an array of Silicon Valley powerhouses — including Google, Amazon, Facebook and Apple — gain from an open Internet and net neutrality, the notion that broadband service providers should treat all data equally, no matter its content, source or volume. That these views have prevailed over long-entrenched telecommunication and cable interests is yet further evidence of the technology industry’s growing political clout inside the White House and on Capitol Hill.

• Netflix hasn’t yet taken a position on Charter Communications’ $67.1 billionpurchases of Time Warner Cable and Bright House Networks, which were announced this week. But if Charter’s chief executive, Thomas M. Rutledge, wants to avoid the fate of Brian Roberts, Comcast’s chairman, he’d better get on the phone with Netflix’s chief executive, Reed Hastings, before it’s too late.

“Netflix has raised some very legitimate issues, and they’ve done an excellent job of presenting their vision of the market,” said Gene Kimmelman, who dealt with Netflix while he was chief counsel at the antitrust division and now runs Public Knowledge, which supports an open Internet.

• At the same time, he said, the influence of any one voice shouldn’t be exaggerated. “Their story just happened to fit perfectly into a broader narrative of the potential for harm to consumers,” Mr. Kimmelman said. But “Netflix’s role is definitely an important piece of the puzzle.”

From Netflix’s point of view, the fact that its views have gained traction with regulators is merely a recognition that its corporate philosophy, which it says has always been to put consumer interests first, coincides with sound public policy. It has opposed mergers like Comcast-Time Warner Cable and sought conditions in others that it feels pose a threat to broadband competition and innovation and to an open Internet.

•  “These broadband issues galvanized many — more than four million Americans, various companies and consumers groups — who all stressed the importance of a free and open Internet,” Corie Wright, director of public policy at Netflix, which is based in Los Gatos, Calif., told me this week. “To the extent the F.C.C. and Justice Department’s decisions reflect a strong focus on Internet consumers, that’s an encouraging sign of good policy-making.”

Netflix points out that its competitors also benefit from an unfettered Internet. So do other streaming services like Hulu and Amazon, as well as industry stalwarts like HBO and CBS that have started their own so-called over-the-top offerings. Verizon, which this month struck a deal to buy AOL, is also poised to introduce its own Internet television offering.

• But Netflix, for better or worse, has become the symbol for net neutrality, which has become a key issue in how regulators analyze proposed cable and telecom mergers.

Of course, government antitrust and communications policy is supposed to benefit consumers, not any individual company or group of companies. “It’s fair to say Netflix has gotten something of a free pass,” said Scott Hemphill, visiting professor of antitrust and intellectual property at New York University School of Law. “This open Internet principle that’s in ascendance is certainly good for Netflix. It’s harder to say it’s good for consumers.”

• A pivotal moment in the net neutrality struggle came last year when Netflix agreed to pay Comcast so-called interconnection fees, a deal that Netflix’s Mr. Hastings last month called a “deal with the devil.” (While Comcast has drawn the brunt of Mr. Hastings’s ire, Netflix also reached similar interconnection deals with every other major Internet service provider.)

But securing payment from Netflix for fast and more reliable access may have been a Pyrrhic victory for Comcast and the other the broadband providers. Until then the notion of net neutrality had been something of an abstraction. But when Netflix subscribers found their programs constantly interrupted for “buffering” (an interruption to download more data), the ability of Internet providers to play favorites seemed all too real. Once Netflix started paying fees to Comcast, its customers suddenly found their service improved substantially.

• A Comcast spokeswoman declined to comment. But Comcast has offered a different narrative, asserting that Cogent Communications, an intermediary that lacked adequate data capacity, caused Netflix’s problems. Once Netflix paid Comcast’s interconnection fee and connected directly to Comcast’s network, the bottleneck largely vanished.

Still, Netflix’s experience with Comcast became Exhibit A with the F.C.C. when Netflix opposed the proposed Comcast-Time Warner Cable merger. “The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers,” Netflix said in a letter to shareholders opposing the merger.

• It probably didn’t hurt Netflix’s case that just about everyone in Washington watches the hit Netflix series “House of Cards,” and Comcast is the dominant Internet provider there. Tom Wheeler, the F.C.C. chairman, said he, too, had suffered buffering problems, which he called “exasperating.”

Mr. Wheeler didn’t mention Netflix in his statement last month praising Comcast’s decision to abandon its bid for Time Warner Cable, which he called “in the best interests of consumers.” But he echoed Netflix’s position in calling the merger an “unacceptable risk to competition and innovation” given ”the growing importance of high-speed broadband to online video and innovative new services.”

• Despite Netflix’s arguments that it shouldn’t have to pay fees to a broadband provider, that proposition is hardly self-evident. The fees Netflix so fiercely opposes are analogous to those found in many industries, such as credit cards, where both consumers and merchants pay the credit card companies. “It’s hard to say if these fees are good or bad for consumers,” Professor Hemphill said.

But Netflix has aggressively pushed the argument that interconnection fees are different because the gatekeepers have too much power and an incentive to abuse it. If regulators continue to sympathize with Netflix’s position, AT&T may have to make at least some of the concessions in its proposed $48 billion takeover of DirecTV. Netflix isn’t opposing the merger outright, but in a letter this month, and in meetings with F.C.C. officials, it has raised concerns similar to those in the Comcast merger: that a combined AT&T-DirecTV has an incentive to protect its existing cable program bundles by imposing data caps or usage fees that disadvantage Netflix and other streaming services using its broadband network.

• And now there’s Charter’s proposed acquisition of Time Warner Cable. Even if Netflix doesn’t come out as forcefully against the merger as it did with the Comcast deal, its position will surely reverberate during the government’s review.

This week, Charter seemed already to be anticipating Netflix’s likely objections and pledged fealty to the notion of net neutrality. “We have no plans to block, throttle or engage in paid prioritization because our customers demand an open Internet,” Mr. Rutledge said in a conference call announcing the deal.

• But if regulators apply the same reasoning they appeared to have used in analyzing the Comcast bid, that may not be enough.

It’s true that a combined Charter-Time Warner Cable wouldn’t be nearly as large, giving it about 30 percent of the high-speed broadband market, nor does it own a content provider like NBCUniversal. But viewed as a national market, Internet service is already highly concentrated, with only a few major competitors. Arguing the proposition that combining three of them into one is in consumers’ interest may be tough given that the Obama administration has publicly complained about the lack of broadband competition.

• Senator Al Franken, the Minnesota Democrat who strongly opposed the Comcast deal, has already sent letters to the Justice Department and F.C.C. saying, “Any deal of this size and scope warrants scrutiny.”