Reed Hastings has done a marvelous job at Netflix, confounding his critics time after time. Hastings, like many application providers, has a position on network neutrality opposite that of Verizon.

So it is unforntunate that his latest letter to shareholders literally mistates existing U.S. Federal Communications Commission policy on impeding or blocking lawful content.

Since 2004, it has been clear that consumers have the right to use all lawful content. The FCC reiterated the policy in 2005.

In 2010 the FCC again clarified that content cannot be blocked. The FCC also said that “A person engaged in the provision of fixed broadband Internet access service, insofar as such person is so engaged, shall not unreasonably discriminate in transmitting lawful network traffic over a consumer’s broadband Internet access service.”

As a practical matter, that means no lawful applications can be blocked or impeded, the exception being measures taken to manage the network.

In practice, that means any ISP that actively tried to “slow down” a competing service’s packets would quickly run afoul of the FCC, just as much as if it had tried to block a lawful application. Some skeptics might argue the FCC would not act, but many would find little incentive or precedent for that position.

Hastings argues in the letter that, “ In principle, a domestic ISP now can legally impede the video streams that members request from Netflix, degrading the experience we jointly provide.”

To put matters politely, that seems a clear misreading of the FCC rules. The FCC’s are based on three principles, transparency, “no blocking,” and “no unreasonable discrimination.”

The “no blocking” principle is that “fixed broadband providers (such as DSL, cable modem, or fixed wireless providers) may not block lawful content, applications, services, or non-harmful devices.”

“Mobile broadband providers may not block lawful websites, or applications that compete with their voice or video telephony services.”

The “no unreasonable discrimination” rule says that “fixed broadband providers may not unreasonably discriminate in transmitting lawful network traffic over a consumer’s broadband Internet access service.”

“Unreasonable discrimination of network traffic could take the form of particular services or websites appearing slower or degraded in quality.”

With all due respect, the way Hastings characterizes what now is possible--”legally impeding video streams”--is in no way accurate or truthful.