Netflix, Inc.’s (NASDAQ:NFLX) troubles with internet speed and its delivery of content to subscribers was explained by Jerry Kent in a recent interview with Bloomberg’s Betty Liu.
Liu started the discussion by telling the Suddenlink Communications Chairman and CEO about Netflix, Inc.’s (NASDAQ:NFLX) recent announcement that they are testing the speed of streaming on various broadband networks. The content distributor basically says that when subscribers experience buffering, it’s the fault of internet service providers and not Netflix, Liu continued.
The discussion is sparked by the assertion Netflix, Inc. (NASDAQ:NFLX) has been making for some time that they are not at fault for sluggish delivery of their content to their subscribers. This has recently been put in the limelight again after the company’s passive-aggressive message to Verizon Communications Inc. (NYSE:VZ) customers in the D.C. area.
Kent started his explanation of the topic by saying that this is really about the national transport of traffic. He noted that when Netflix, Inc. (NASDAQ:NFLX) started out they were paying over $500 million every year in transport cost to FedEx Corporation (NYSE:FDX) and various other companies to distribute content. Now that the company delivers content over the web, they have to pay companies like Akamai Technologies, Inc. (NASDAQ:AKAM) and Level 3 Communications, Inc. (NYSE:LVLT) for national transport for their data. These companies in turn hand off the data to internet service providers like Verizon Communications Inc. (NYSE:VZ).
The executive continued by saying that the issue is where does the speed break down for Netflix, Inc. (NASDAQ:NFLX): is it with their national transport or with internet service providers for local transport of data. Kent also mentioned that the content distributor has also had a spat with Comcast Corporation (NASDAQ:CMCSA) in the past as they insisted they should not be charged for prioritization of data transport.
Liu then asked Kent whether this is just Netflix making an excuse. Kent answered by saying that it would be easy to say that Netflix has the problem if one were to look at Verizon and see that only Netflix content slow to load. If all video content over the internet service provider is slow, then the breakdown would be with the ISP, he noted.
Watch the video below where Kent and Liu also discuss consumers hating internet service providers and net neutrality.
Light Street Capital managed by Glen Kacher reported 70,000 shares in Netflix with a value of about $24.64 million by the end of the first quarter. Another investor in the company is Alex Sacerdote’s Whale Rock Capital Management which had 62,462-share $21.99-million stake in the company by the end of March.