A thought leader in industry behavior and public policy, Scott Cleland wrote the book Search & Destroy: Why You Can't Trust Google Inc. in 2011, and currently serves as president of the research consultancy Precursor LLC. Scott Cleland’s work with Precursor includes the maintenance of a blog that covers subjects like communications regulations and corporate welfare.

1. PRECURSOR BLOG
EXPLAINS NETFLIX
RESPONSE TO
REGULATORY ARBITRAGE
Scott Cleland

2. INTRODUCTION
 A thought leader in industry behavior and public policy, Scott Cleland wrote
the book Search & Destroy: Why You Can't Trust Google Inc. in 2011, and
currently serves as president of the research consultancy Precursor LLC. Scott
Cleland’s work with Precursor includes the maintenance of a blog that covers
subjects like communications regulations and corporate welfare.
In a recent post on the Precursor blog, Mr. Cleland discussed how Netflix
influenced the Federal Communications Commission (FCC) mandate
requiring a “permanent zero price for Internet downstream traffic.” Between
2010 and 2014, Netflix’s streaming business was effectively subsidized, but a
2014 Appeals court decision jeopardized that practice, and thus, the
company’s profit margin. However, Netflix played an instrumental role in
ensuring that its distribution costs continued to be government-subsidized
by utilizing the concept of net neutrality to lobby for the FCC’s current
permanent zero-price regulation.

3. REGULATORY ARBITRAGE
 The article states that although Netflix has
successfully achieved regulatory arbitrage for the time
being, the fate of FCC’s stance on net neutrality
remains uncertain. Ultimately, the zero-price
distribution “subsidy” in the US is contingent on the
future legal and political climate.
To learn more about Netflix and Internet regulation,
please visit www.precursorblog.com.