Thought the controversy between Netflix (NASDAQ: NFLX) and major Internet service providers on data throttling was in the past? Hardly, as the SVOD provider said that it has been lowering the quality of its video streams for five years to wireless carriers worldwide, including Verizon (NYSE: VZ) and AT&T (NYSE: T).
Netflix's Anne Marie Squeo said in a March 23 blog post that "in an effort to protect our members from overage charges when they exceed mobile data caps, our default bitrate for viewing over mobile networks has been capped globally at 600 kilobits per second."
The announcement came after T-Mobile (NYSE:TMUS) CEO John Legere said that Netflix video quality on AT&T and Verizon mobile networks was lower than it was on T-Mobile's network. The two carriers denied that they were throttling data.
Netflix does not cap T-Mobile or Sprint (NYSE: S) data; those two carriers do not charge users extra for traveling over their monthly data allotments.
Squeo said that Netflix is launching a new "data saver feature" in May that will allow mobile users to decide what level of quality they want when streaming videos.
AT&T and Verizon said they were not aware of the throttling. "We're outraged to learn that Netflix is apparently throttling video for their AT&T customers without their knowledge or consent," said Jim Ciccione, AT&T's senior vice president of external and legislative affairs, in a prepared statement. "Verizon does not request any manipulation of content by the host service; a Verizon customer on-the-go gets the content at the resolution provided by the host service," said a Verizon representative.
While Netflix's strategy doesn't violate net neutrality laws, critics said the announcement was hypocritical. "Netflix fought hard during the open Internet proceeding to ensure that broadband providers could not engage in this same behavior that would benefit the same customers in the same way," said Doug Brake, an analyst with the Information Technology & Innovation Foundation (ITIF) in a blog post. The ITIF disagrees with the FCC's decision to apply Title II regulations to net neutrality rules.
"If Netflix was limiting transmission speeds and picture quality for its users without telling them, as appears all too likely, that's a bad thing," said Matt Wood, policy director at Free Press, in a blog post. However, lack of transparency in how it delivers content is not the same as networks throttling data to users in the last mile, he said. "While Net Neutrality opponents often falsely equate the two, the content on the Internet isn't the same thing as the wire that connects you to it. And regulating those wires (or wireless signals) that carry content to you isn't the same thing as regulating the content itself."
Netflix itself said the 600 kbps limit "hasn't been an issue for our members. Our research and testing indicates that many members worry about exceeding their mobile data cap, and don't need the same resolution on their mobile phone as on a large screen TV to enjoy shows and movies," Squeo said.
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