Why Netflix is raising your monthly bill as much as 20% — eventually

In an extensive post, Netflix CEO Reed Hastings called for “strong net neutrality,” as opposed to the “weak net neutrality” that currently exists, and which allows ISPs to theoretically, if not actually, bully Internet businesses into paying fees in order for consumers to be able to enjoy their services at better speeds. Hastings said "The essence of net neutrality is that ISPs such as AT&T and Comcast don’t restrict, influence or otherwise meddle with the choices consumers make. The traditional form of net neutrality which was recently overturned by a Verizon lawsuit is important, but insufficient."

Netflix (NFLX) CEO Reed Hastings learned the hard way that announcing a big price increase can blow up into a huge controversy. So for his latest effort to charge more, he’s moving slowly – very slowly.

Along with Monday’s quarterly earnings release for Wall Street, Hastings said the cost of Netflix would go up $1 to $2 a month for new customers, depending on the country. Current customers will be “generously grandfathered” for at least a year, maybe two. Hastings had foreshadowed the increase on January’s earnings call as well, confirming that Netflix was testing different price points.

But at the current popular price of $7.99 a month, Netflix is growing like mad and expanding worldwide. It gained almost 12 million paying members over the past year and revenue was up 24%. So why the need for a price increase?

Further, there's obviously some risk for Hastings with this tactic. Back in 2011, his plan to spin off DVD operations into a new unit called Qwikster and raise prices 60% had immediate consequences, as Netflix lost one million subscribers and its stock plunged almost 80% in a few months.