Recently, the Federal Communications Commission s new chairman Ajit Pai stated that the investigation into zero rating is being closed down and the Commission will not take any further action against AT, Verizon Communications and T-Mobile for this practice, by which they apply no data charges for selected streaming services.
Several experts believe that this strategy impacts net neutrality since it encourages customers to use their broadband connections for these specific streaming services impacting other players such as Netflix negatively.
Netflix states that this policy should not impact its domestic margins, given its popularity with users, which enables it to have stable relationships with internet service providers.
However, this policy will make viewing Netflix more expensive for users compared to these other streaming services where data charges do not apply.
It is Netflix s strategy to maintain a competitive edge is based on high quality of its content, in which it is making a significant investment in original programming.
Recently, the company entered into an agreement with Comcast where it would pay the latter an undisclosed sum for which Comcast would directly connect to Netflix s servers, improving the streaming quality for Netflix content.