Netflix shares dropped Wednesday amid concerns that the video streaming giant could face higher content delivery costs after the U.S. Court of Appeals for the District of Columbia on Tuesday vacated much of the FCC's Open Internet Order and kicked it back to the Commission.
The concern is that the decision could clear the way for cable operators and other broadband ISPs to charge Netflix and other over-the-top video providers extra for access to prioritized, higher-speed connections that would ensure the high-quality delivery of their content. On Tuesday, National Cable & Telecommunications Association president Michael Powell said the partial repeal of the Order will not lead to significant changes in how ISPs manage their networks. Comcast, meanwhile, reiterated that it will stand by its commitment to adhere to the Open Internet rules per the conditions linked to its acquisition of NBCUniversal.
Still, Netflix could face annual content costs in the range of $75 million to $100 million in delivery costs if MSOs opted for policies that discriminated against the over-the-top video provider, George Askew, an analyst at Stifel Nicolaus, estimated in a research note issued Wednesday, according to USA Today.