Online on-demand video seems like the next step in evolution of broadcast television. Until the dreaded slowdowns and freezes crop up, that is. One of the biggest players in the digital video distribution market is Netflix, reaching almost 50 million subscribers worldwide. Satisfying so many customers requires vasts amounts of bandwidth, sometimes too much for an Internet Service Provider (ISP) to handle. In an ongoing battle for transparency and the best viewing experience, Netflix is refusing to back down against Verizon’s insufficient speeds and legal actions.
Netflix recently began displaying a notification stating that a Verizon network is too crowded whenever video slowdowns occur. Verizon’s vice president of federal regulatory affairs, David Young, has criticized the move as a PR stunt. A cease-and-desist letter followed on June 5, asking the streaming giant to remove the negative message.
However, Netflix has now responded to the letter on June 9, formally turning down the request. David Hyman, Netflix’s General Counsel, stated that Verizon Executive Vice President Randal Milch has “mischaracterized” the message. He further explained that the notice was not specific to Verizon and would in fact appear for any other ISP which network could not keep up with the video streaming demands. Netflix explains the notices are a part of their ongoing campaign for better transparency and informing their customers about congestion on various networks.
Furthermore, Netflix has performed an ISP speed test for a variety of the biggest providers. As it turns out, Verizon DSL is at the very bottom with an average speed of 1.05 MBps. Verizon Fios was at the 10th spot with average speed of 1.90 Mbps. Many other popular providers, such as Cox, Charter or Comcast were above it, proving two to three times faster. The full report is available on Netflix’s official blog.
Netflix refusing to back down against Verizon could potentially send a strong statement about net neutrality. In their blog, they explained that some US ISPs are effectively creating “toll booths” and refusing to provide full capacity to online services unless the toll is paid. This is exactly what the proponents of net neutrality have been trying to caution the public about. Some websites could receive preferential treatment, thus ensuring greater popularity due to more reliable service. The toll booths might be just a small hurdle for bigger businesses, such as Facebook or YouTube, but could prove deadly to new startups.
As Forbes contributor Robert Passikoff points out, the outcome of this feud might also be influenced by customer brand loyalty. According to Passikoff, when measuring brand engagement, Netflix scores around 89 percent versus Verizon’s 77 percent. He also points out a survey which showed 86 percent of customers usually blame the ISP for slowdowns, rather than a particular website. This is part of the reason why Verizon is pursuing legal remedies. The message shown by Netflix only further damages their brand image.
At the end of the day, Netflix’s claims of transparency and defense of net neutrality ought to be taken with a grain of salt. The company did, after all, agree to pay the proverbial tolls for better service (albeit begrudgingly) back in April. It began displaying the message after not seeing an improvement in speeds. There is a clear financial motive for the campaign, and businesses have to make money. This does not mean the motives are mutually exclusive however. In either case, Netflix refusing to back down against Verizon is a good thing for the customers and the future of neutral internet.
By Jakub Kasztalski