Netflix wants to put Comcast genie back in "fast lane" bottle In the second season of House of Cards, Netflix's blockbuster political drama, viewers became acquainted with Raymond Tusk, a billionaire industrialist and éminence grise of the US president. Mr Tusk was the embodiment of all that is wrong with corporate America: mighty, monopolistic and far too close to the White House. Just 10 days after the release of the second series in February, Reed Hastings, Netflix chief executive, announced a landmark deal that had been hammered out in the same Washington back rooms frequented by Mr Tusk's fictional lobbyists. His company agreed to pay Comcast an undisclosed sum, said to be $15m-$20m a year, in exchange for faster and more reliable access to the cable group's broadband customers. Since then, Netflix has made no secret of which of the two companies it thinks most closely mirrors Mr Tusk's conglomerate. The agreement he made was so important because it set a precedent that content companies like Netflix should pay companies like Comcast to access their customers, and led to a string of similar agreements with other internet providers including Verizon. The film and television streaming group had for the first time agreed to pay for an internet "fast lane" to reach customers, trampling over the principle of net neutrality, whereby the internet should be a level playing field with no such fast lanes or tolls. This idea had been an article of faith for Netflix and many of its West Coast neighbours including Amazon and Facebook. A start-up would be guaranteed the same speed and access to its customers as a behemoth such as Google. A decade after the term was coined by a Columbia University professor, the concept has also captured the public imagination. Ever since the Federal Communications Commission, the US telecommunications watchdog, passed a rule that would pave the way for a paid-for internet fast lane in July, it has received a record 3.9m comments from the public, mostly opposing the plans. The last time the FCC had to deal with an outcry anywhere near that size was when a "wardrobe malfunction" led to images of singer Janet Jackson's bare breast being beamed live to 111m viewers during the 2004 Super Bowl. Total number of comments then: 1.5m. On the opposing side of the argument is a clutch of companies that are best described as the "pipe guys" - broadband and cable groups such as Comcast, Time Warner Cable and Charter Communications, as well as telecommunications networks including Verizon and AT&T. Time and again, they point to one statistic: Netflix and YouTube, Google's video site, account for half of peak internet traffic in North America, so why should the pipe guys stump up the investment to subsidise the content providers" growth? Netflix says it had no choice but to hold its nose and do the deal with Comcast. "The degradation in quality that customers were experiencing in late 2013 led to a rise in complaints and cancellations," the company said. We just couldn't ignore it any more. After signing the multiyear agreement, download speeds jumped markedly. Netflix now wants to put the genie back in the bottle. It fears the deal has set a precedent that all content providers will have to transfer some of their revenues to the pipe guys. The company sees a cautionary tale in the fees that cable and satellite companies pay to broadcasters in return for their content. In 2006, six years after the fees were introduced, they were worth $200m. Now they are worth almost $5bn, a figure that is set to almost double to $9.3bn by 2020, according to SNL Kagan. If the fees Netflix pays to the pipe guys are to grow at anywhere near that rate, it could put a strain on the company's business model. It has marketed itself as an ultra-cheap alternative to the $100-plus packages offered by traditional pay-TV providers, with plans starting from $7.99 a month. It would be hard to maintain such low prices if Netflix were handing out hundreds of millions annually to Comcast and its peers. Last month, the group blamed its lacklustre third-quarter earnings on price hikes, warning "slightly higher prices result in slightly less growth." Comcast said: "Netflix executives conceded our interconnection agreement "works great for consumers" and . . . have repeatedly said interconnection was in no way related to their recent price increases which were driven by programming costs. The cost of interconnection is minuscule compared to the amount Netflix spends on programming. Mike Mooney, senior vice-president and group general counsel at Level 3, a communications company that owns much of the internet infrastructure in the US, warns that the likes of Verizon and Comcast have a vested interest in pushing up Netflix's prices because they have their own competing content to sell: Comcast owns broadcaster NBC, while Verizon is expanding its fibre video service. Do only wealthy content providers who can afford the fast lane succeed? They have an incentive to heavily congest the slow lanes so more people move to their fast lanes," explains Mr Mooney, who says they are in an enviable position. They are in the catbird seat. Either they get more money off of their rivals, or their rivals" customers suffer substandard quality." The issue has also become a partisan battle in Washington. Last month, President Barack Obama said he was "unequivocally committed to net neutrality" and firmly against "the notion that somehow some folks can pay a little more money and get . . . more exclusive access to customers," earning cheers from his Silicon Valley audience. Yet Tom Wheeler, chairman of the Federal Communications Commission, is in an unenviable position. His previous attempt to ban fast lanes was thrown out by the US Court of Appeals for the DC Circuit following a challenge from Verizon. Now Mr Wheeler is trying to find some kind of compromise. One option that has been floated is a hybrid approach that would strictly regulate the "back end" of the internet - including deals with Netflix - while giving the pipe guys more freedom when it comes to selling to consumers, a plan that Craig Moffett, an analyst at MoffettNathanson research, has described as a "grand bargain." Verizon was quick to say that any "so-called hybrid" approach "would be unlikely to stand up in court." TechFreedom, a think-tank that does not disclose its backers, but which regularly speaks up for the pipe guys, said: "King Solomon wasn't serious when he proposed splitting the baby. Let's hope chairman Wheeler isn't either. Free Press, a think-tank on the opposing side of the debate, described the plan as a "Frankenstein" form of net neutrality and warned the "legally dubious hybrid proposals won't protect internet users." As Frank Underwood, Kevin Spacey's fictional US president in House of Cards, would no doubt tell Mr Wheeler, the problem with grand bargains is that they end up disappointing everybody. Fast lanes ruling In January, the US Court of Appeals for the DC Circuit threw out the FCC's attempts to ban internet fast lanes. Its reasoning was technical but important. Under existing rules, broadband providers are classified as "information services" rather than "telecommunications services." That means they are regulated with a much lighter touch, and the court ruled the FCC's attempt to introduce tough new rules was a case of over-reach. The court said if the FCC wanted to ban fast lanes, it would have to reclassify broadband providers as "telecommunications services." But the last time the FCC attempted something that radical, during the tenure of Mr Wheeler's predecessor Julius Genachowski in 2010, it prompted an outcry among Republicans, who passed a bill in the House of Representatives that threatened to slash the watchdog's budget. People close to Mr Wheeler say he has little appetite for the same fight. Although reclassifying broadband companies is still an option, Mr Wheeler is seriously exploring some kind of compromise designed to appease Netflix and its supporters, including the US president, without prompting a string of legal challenges. One plan that was floated last week would split broadband regulation into two. The "back end" of the network - the part where Netflix connects to Comcast et al - would be a tightly-regulated telecoms service. That means the FCC would be able to police deals like the one Netflix did in February. Those deals would not be banned outright, but Comcast and other broadband groups would be forced to show they were good for consumers. Retail broadband - the part where Comcast et al. connect to their customers -- would continue to be a lightly-regulated information service, which Mr Wheeler hopes will assuage concerns that the FCC is tying up the internet in red tape.