When the Federal Communications Commission was voting to reclassify broadband as a utility last year, Netflix was a big supporter of the the change, celebrating how the decision would protect open Internet values. "The net neutrality debate is about who picks winners and losers online: Internet service providers or consumers. Today, the FCC settled it: Consumers win," the company said after the vote. But it turns out that Netflix's actual stance isn't so simple.
On Thursday, the Wall Street Journal reported that Netflix has been reducing the quality of its streaming videos when users watch them using wireless data on AT&T or Verizon. This is called "throttling," and it's a practice that Netflix often spoke out against when broadband providers like Comcast and Verizon FiOS were throttling their customers' video streams.
The Journal reports, though, that Netflix has been quietly throttling on mobile for five years. Five. Years. The company claims that the goal was to “protect consumers from exceeding mobile data caps.” It's hard to get over the initial smack of hypocrisy and process what they're saying, but let's try.
The noble, paternalistic defense is consistent with Netflix's decision to participate in T-Mobile's "Binge On" program, in which content streaming from T-Mobile partners (like Netflix and Hulu) doesn't count against a user's monthly data cap. But Binge On is controversial from a net neutrality perspective, because it subtly shapes the sites and services customers choose to use. If you can stream video on certain services without using up your data allotment, why would you even consider trying other ones that will count againt your balance? T-Mobile claims that the practice (known as zero-rating) isn't a problem because any service can apply to become a Binge On partner.
In 2012, when Comcast was instituting similar caps and Netflix wasn't a privileged partner, Netflix CEO Reed Hastings wrote, "The same device, the same IP address, the same wifi, the same internet connection, but totally different cap treatment. In what way is this neutral?" But in January, Ars Technica reported that Hastings had a favorable opinion of Binge On. "It's voluntary on the customer. Any customer of T-Mobile's can decide to turn it on or turn it off—that would be a big difference," he said in an earnings call. "They're not charging any of the providers; it's an open program. Many of our competitors such as Hulu and HBO are in the program also."
Seems inconsistent! But he added, "It's seeing a great reception amongst our users and we're seeing viewing going up." There it is.
Netflix told the Journal that it doesn't throttle T-Mobile and Sprint customers because the companies are more lenient than Verizon and AT&T about penalties when customers go over their data limits. But the company also added that it is looking into “new ways to give members more control in choosing video quality” like a “data saver” dashboard that is supposed to come out in May to offer more granular control.
AT&T jumped at the opportunity to get on its high horse. “We’re outraged to learn that Netflix is apparently throttling video for their AT&T customers without their knowledge or consent,” said senior executive vice president of external and legislative affairs Jim Cicconi.
Netflix needs to straighten out its net neutrality positions to do right by its customers. And also to avoid groups from all sides of the debate having a field day at its expense.