Netflix CEO Reed Hastings.JD Lasica
Since Netflix’s admission last week that it throttles video on most mobile networks to help customers avoid data cap overage charges, Internet service providers and anti-net neutrality think tanks have been blasting the online video provider. Netflix is a hypocrite because it throttles its own video streams even as it supports net neutrality rules that prevent ISPs from throttling traffic that passes over their networks, they claim.
Even AT&T, which has throttled its own unlimited data users for years and tried to avoid any punishment for doing so, said it is “outraged” by Netflix’s actions.
While most ISPs want the elimination of the Federal Communications Commission’s net neutrality rules, they generally are not demanding that new rules be applied to Netflix.
But there is an exception.
The American Cable Association, a cable lobby group that represents more than 900 small and medium-sized companies, has called on the FCC to consider writing new rules that apply to Netflix and similar online content providers (“edge providers” in industry parlance).
The FCC’s “approach to Net Neutrality is horribly one-sided and unfair because it leaves consumers unprotected from the actions of edge providers that block and throttle lawful traffic,” the ACA said Friday. Netflix’s confession of throttling provides “further evidence” that consumers are being harmed, the group claimed.
The FCC should thus “initiate a Notice of Inquiry into the practices of edge providers and how these companies can threaten the openness of the Internet,” the ACA continued. “Under Section 706 [of the Telecommunications Act of 1996], the FCC has the authority to conduct such an inquiry and issue regulations, should it be deemed necessary.” (Hat tip to DSLReports.)
The ACA is pushing for this regulatory proceeding even though Netflix’s throttling affected only mobile networks, not the cable Internet that is provided by members of this lobby group.
The ACA is one of several broadband industry groups that is suing the FCC to prevent net neutrality rules from being applied to ISPs.
An FCC spokesperson declined comment when contacted by Ars, but the FCC is unlikely to grant the ACA’s request.
The commission’s net neutrality rules apply only to Internet service providers because they handle all the traffic that gets delivered to home Internet and mobile broadband customers. Without such rules, ISPs could block or throttle Web services offered by businesses that don’t pay tolls, or charge fees to online services in exchange for faster access than companies that don’t pay.
The rules, in short, are designed to give all lawful websites and online services access to consumer broadband networks without paying special fees beyond the normal costs of Internet access and content delivery. (Netflix operates its own content delivery network and is paying major ISPs for network interconnection, but that’s a different story.) There’s no rule saying Netflix or other online service providers have to deliver their services at the highest possible quality.
If there were, Netflix might be compelled to always provide 4K video when it’s available, quickly pushing its customers over the data caps imposed by Internet service providers.
Netflix “should be able to manage its data” as it sees fit
Should there be some kind of anti-throttling rule applied to Netflix? The Information Technology & Innovation Foundation (ITIF), a think tank that opposed the FCC’s net neutrality regulations, says no.
“These are Netflix’s video streams, and it should be able to manage its data however it thinks will best please its customers,” ITIF telecom analyst Doug Brake wrote. “But what is good for the Netflix goose should be good for the gander: If Netflix is free to manage its traffic to better serve consumers, Internet Service Providers (ISPs), who are in an even better position to understand the traffic patterns and dynamics at play within the network itself, should be able to do the same.
Same customers, same practice, same good outcome, but as it stands today, only one is unlawful.”
The FCC’s net neutrality order argued that there wouldn’t be good outcomes if ISPs were free to throttle. Net neutrality rules should be applied to broadband providers because they “have both the incentive and the ability to act as gatekeepers standing between edge providers and consumers,” the FCC said. “As gatekeepers, they can block access altogether; they can target competitors, including competitors to their own video services; and they can extract unfair tolls.”
In other words, the FCC appears to believe that Netflix throttling itself doesn’t pose the threat to competition that would be caused by ISPs throttling services that don’t pay for access.
Still, in our view, Netflix could have been more transparent about its throttling and how it gets applied.
Netflix throttles video on most mobile networks including AT&T and Verizon Wireless to bitrates of 600kbps, while making exceptions for Sprint and T-Mobile. Both Sprint and T-Mobile offer data plans that slow speeds—rather than charge overage fees—after customers exceed their data caps. T-Mobile also exempts Netflix and dozens of other video providers from its high-speed data limits unless customers disable a setting in order to opt for higher video quality.
Netflix’s selective throttling thus meets the provider’s stated goal of helping customers watch more video while staying under their monthly data caps. Starting in May, Netflix will let its customers adjust their bitrates on mobile networks—an option the company already provides for home Internet connections, where data caps are either nonexistent or not as strict. With this new system in place, Netflix will let its customers decide how much data to use while on mobile networks, a step in the right direction.
But Netflix reportedly throttled on mobile networks for more than five years without disclosing the system until last week. The throttling apparently applies even to AT&T and Verizon customers who pay for unlimited data or bigger-than-average data plans. Netflix didn’t break any rule by keeping this quiet, but it would have been better for customers if the company had disclosed the throttling earlier and given customers control over video quality and data usage as soon as it was possible.
Netflix CEO Reed Hastings.JD Lasica