For Now… Netflix Has Mastered Regulatory Arbitrage
Imagine if one company out of the Fortune 500, #474 with ~$6b in revenues, and 2,000 employees, representing about .03% of U.S. GDP, and .06% of the population, comprised 36% of all the vehicle traffic going in one direction on our interstate highway system on any given day.
Now imagine that one company’s lobbying was instrumental in convincing the government to grant that company’s business model the right to commercially use the highway system forever for free, by not ever having to pay a standard gas tax or private highway tolls, like other businesses or people do to pay for the relative wear and tear that their usage causes on the highway systems.
Imagine further that the government justified this special one-way highway traffic treatment, by saying it would be better and fairer for everyone if the companies that use and profit most from using the most one direction of the highway system never had to pay for that delivery benefit – that consumers should subsidize their commercial use and profits in “perpetuity.”
The company’s situation you just imagined is Netflix’. The government agency is the FCC. And the perverse government arrangement is the FCC’s mandate of a permanent zero price for all Internet downstream traffic.