by Daniel A. Lyons
Free State Foundation
March 06, 2014
Last week, Netflix and Comcast signed a “mutually beneficial interconnection agreement.” Although the companies did not disclose their terms, most assume that Netflix will pay to connect its servers directly to the Comcast network and stream content to Comcast customers more efficiently. Net neutrality proponents, already smarting from last month’s D.C. Circuit decision, quickly condemned the agreement as a revolutionary and ominous milestone. While this step may not be as revolutionary as the blogosphere suggests, it may be somewhat evolutionary. Netflix and Comcast’s decision to eliminate the middleman is not inherently anticompetitive and is likely welfare-enhancing because it gets services to consumers faster and with fewer potential interruptions. We should expect this type of creative destruction in markets as dynamic as Internet service, where new innovations demand new and better ways to reach consumers.

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