The Cable Industry Wants Netflix Investigated... For Throttling Itself

from the blowhards-and-fisticuffs dept

Netflix's criticism of usage caps and vocal support of net neutrality (not to mention its threat as a pay TV competitor) has helped it replace Google as public enemy number one for the telecom industry. As such, every PR, lobbying, and political asset at the telecom industry's disposal has taken aim at the streaming giant over the last few years, accusing the company of being a dirty freeloader and horrible hypocrite that's unfairly lobbying the government to attack poor, honest, hardworking companies like AT&T and Comcast.

So when Netflix announced last week it was throttling the connections of AT&T and Verizon customers, the telecom industry's various policy tendrils quivered in collective orgasm at the fresh opportunity for attack.

As noted last week, offhand comments by T-Mobile CEO John Legere appear to have forced Netflix to admit that it has been throttling AT&T and Verizon wireless customers back to 600 kbps. This was, the company insists in a blog post, an attempt to help out users stuck on metered plans with low usage caps and high overage fees. More curiously perhaps, Netflix also admitted that it hasn't been throttling connections for users on Sprint and T-Mobile, because "historically those two companies have had more consumer-friendly policies" (read: they offer unlimited data plans).

Netflix's revelation quickly resulted in AT&T, a company that has throttled customers and lied about it for years, insisting it was "outraged" by the revelation (since obviously Netflix's decision would have cost it user overage fee penalties). The American Cable Association, a coalition of hundreds of smaller cable companies (but with Comcast NBC Universal also as a member) took things one step further, issuing a statement demanding an FCC investigation into Netflix's behavior:
"ACA has said all along that this Federal Communications Commission'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 FCC's disclosure rules also fall short by covering ISPs but allowing edge providers to affect consumers' Internet experience in the same ways that ISPs' actions can. And now we see further evidence of these shortcomings in Netflix's confession that it has been engaging in covert video throttling to select groups of consumers."

"ACA is disappointed, but not surprised, that Netflix used its immunity from the FCC's Net Neutrality rules to engage in this practice. Netflix has the ability and incentive to engage in this anti-consumer behavior notwithstanding its impact on the virtual cycle that promotes the broadband deployment sustaining Netflix's business model. In light of this revelation, ACA calls on the FCC to initiate a Notice of Inquiry into the practices of edge providers and how these companies can threaten the openness of the Internet. Under Section 706, the FCC has the authority to conduct such an inquiry and issue regulations, should it be deemed necessary."
There's obviously a few things wrong with that statement. One, it's not a net neutrality violation if you're throttling yourself, that's just vanilla stupid. Two, net neutrality rules were applied to the broadband industry because of limited competition. If there was competition, users could punish bad behavior by switching ISPs, making the rules unnecessary. Net neutrality rules weren't applied to edge content companies because users actually have a choice of options there. The same can't be said for the broadband industry, where most are lucky to have the choice of one ISP that can provide anything resembling next-gen connectivity.

If there's one thing that Netflix can be dinged for, it's for lecturing ISPs on transparency, then failing to reveal that this was even happening. And thanks to competition, anybody bothered by that (and that's not many, since nobody noticed what Netflix was doing for five years) has the choice of switching streaming video providers. But an investigation into a company for effectively throttling itself? The cable industry either doesn't actually understand how net neutrality works, or it's feeding the public a line of bullshit, trying to saddle Netflix with regulations it just spent the last decade trying to argue weren't necessary in the first place.

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  • identicon
    JD, 29 Mar 2016 @ 10:59am

    Next up for the FCC to investigate....

    The ACA has also demanded that the FCC look into and fine websites which automatically detect whether you're on a mobile or desktop device, give you a scaled image based on your screen size, or provide lower-quality images to customers on a slow connection.

    reply to this | link to this | view in chronology ]

  • icon
    radix (profile), 29 Mar 2016 @ 11:09am

    How long has this been going on?

    Remember this screen?
    http://s3.amazonaws.com/digitaltrends-uploads-prod/2014/06/Netflix-Verizon-.png
    That was in response to Verizon not peering with Netflix servers and allowing the connections to become bottlenecked.

    As the party actually displaying the content, that gives Netflix a lot of power to be the one controlling the message. Now they are doing the same thing ("adjusting" the video) but not telling anyone about it since they are doing it by choice. And, surprise!, not being totally up front about it.

    I understand why they are doing it, but it seems like a bit of a double standard to throw Verizon to the wolves over throttling without telling people about it, raking T-Mobile over the coals for throttling on an opt-out basis, but completely defending Netflix for doing the same things.

    If they had been open and honest about this and provided an opt-in within the app, they could have permanently claimed the moral high ground on the issue. Not that I think it's illegal (the Telcos are just blustering), but it's certainly a missed opportunity.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 29 Mar 2016 @ 11:20am

      Re: How long has this been going on?

      "Netflix for doing the same things"

      But it's not the same thing - is it?

      reply to this | link to this | view in chronology ]

      • icon
        Jeremy Lyman (profile), 29 Mar 2016 @ 11:31am

        Re: Re: How long has this been going on?

        No, not at all. I'm apparently the only one on the Internet who has a problem with everyone calling this practice "throttling." It's a misnomer, and it lead exactly to this resultant attack from the Bit-Delivery Industry. They would love nothing more than to further conflate the distinction between content providers, who choose what to send, and content deliverers, who choose how to send it.
        "effectively throttling itself"
        This is the only concession I've seen in the coverage; not just calling it outright throttling. Maybe it's confusing because Netflix and other large providers' engineered response to bandwidth throttling is the resolution reduction we're talking about. But just because the end result is similar doesn't mean we can or should call them the same thing.

        reply to this | link to this | view in chronology ]

    • icon
      John Fenderson (profile), 29 Mar 2016 @ 11:29am

      Re: How long has this been going on?

      "completely defending Netflix for doing the same things."

      But it's not the same thing at all. Netflix is throttling it's own traffic, not other people's. It's an enormous difference.

      reply to this | link to this | view in chronology ]

      • icon
        radix (profile), 29 Mar 2016 @ 3:55pm

        Re: Re: How long has this been going on?

        That's where we disagree, then. I believe this should be seen as the consumer's traffic.

        The result is the same, no matter who is throttling, or optimizing, or whatever it should be called. People are getting a degraded experience, through no affirmative choices of their own, due to the actions of a company somewhere in the chain.

        reply to this | link to this | view in chronology ]

        • icon
          John Fenderson (profile), 29 Mar 2016 @ 4:54pm

          Re: Re: Re: How long has this been going on?

          But, in this case, it's not the consumer's traffic. It's under the legal control of Netflix and is coming from Netflix servers. I'm not sure how that equates.

          What you're really complaining about is a company that has degraded the service that you're buying. That's a legitimate complaint, but it's not one that relates to network neutrality issues.

          Particularly since you can easily just ditch Netflix and go with alternatives -- something that is impossible for many (most?) broadband customers.

          reply to this | link to this | view in chronology ]

        • icon
          Killercool (profile), 29 Mar 2016 @ 4:55pm

          Re: Re: Re: How long has this been going on?

          The big, glaring difference, is that if Netflix is the one limiting bandwidth to their customers, the customer can simply decide to choose a different service. When the telco/cableco decides to throttle specific connections, the customer is (usually) unable to express their unhappiness except by not using the internet.

          You're saying that a restaurant arbitrarily taking 3 hours to bring out my sandwich is the same as the public bus system arbitrarily detaining me for three hours because I'm not buying bus station food.

          The end result may be the same in this specific situation, for these specific customers, but my options are much more limited when it is my service provider screwing me over.

          reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 30 Mar 2016 @ 2:20pm

        Re: Re: How long has this been going on?

        look at it this way...

        If I put a governor on my car so that it only goes 55, and I enter a race, I am totally responsible for the results.

        Now if I put governors on all the other competitors cars to limit them to 55, but take mine off so my American muscle car can go 120. I may win the race, but there would be some pissed off competition.

        Limiting yourself <> limiting competitors...

        reply to this | link to this | view in chronology ]

  • icon
    Designerfx (profile), 29 Mar 2016 @ 11:14am

    That isn't why this is happening

    Cable industry simply wants heat off themselves. It's much easier to point at those who you are exploiting and get a focus on them to reduce the focus on your own activities.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 29 Mar 2016 @ 11:17am

      Re: That isn't why this is happening

      yep, but the response by us should be to just add Netflix to the pile of ass holes that need to burn.

      I am considering writing to these clowns and threatening to cancel my subscription.

      reply to this | link to this | view in chronology ]

      • icon
        Jeremy Lyman (profile), 29 Mar 2016 @ 11:39am

        Re: Re: That isn't why this is happening

        And you can do that! There are lots of other people you can entertainment buy from and you won't even lose access to any utilities!

        reply to this | link to this | view in chronology ]

      • icon
        Adam (profile), 29 Mar 2016 @ 11:55am

        Re: Re: That isn't why this is happening

        Go ahead and cancel. One less stream I have to compete with to get my 1080p

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 29 Mar 2016 @ 12:43pm

          Re: Re: Re: That isn't why this is happening

          You obviously were not reading the article... they are throttling it regardless of available bandwidth.

          It's hard to compete with bandwidth when you are throttled at the gate.

          reply to this | link to this | view in chronology ]

          • icon
            JoeCool (profile), 29 Mar 2016 @ 2:12pm

            Re: Re: Re: Re: That isn't why this is happening

            They throttle it regardless of bandwidth because of the super low caps on usage by nearly every provider. Who cares how fast your bandwidth is when you only get 1 or 2 GB of data before being charged an arm and a leg? The most "generous" caps I've seen tend to be 10 GB before being charged and arm and a leg. Netflix has a lot of kids programming, and they're rightly concerned that kids will not understand that watching their favorite cartoon ten times a day at 1080p is killing mommy and daddy with overage charges.

            reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 29 Mar 2016 @ 12:15pm

        Re: Re: That isn't why this is happening

        The primary difference between Netflix and AT&T is that Netflix actually does exactly what it says on the tin.

        I haven't heard of a single major ISP that can reliably do that. And yet, here in the UK, I can get a wide range of different reliable services.

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 29 Mar 2016 @ 12:40pm

          Re: Re: Re: That isn't why this is happening

          There are a couple of problems going on with Netflix.

          The bigger problem in this picture is the content provider and content creator problem.

          I liked netflix until they started creating content and gaining exclusives.

          I don't know about the rest of you but this is a conflict of interest and will likely end badly. A market does better with competition, not with exclusives, and Netflix is positioning itself to become the next Asshole on the block if it decides it wants to.

          We have been down this road too many times and I still see the same idiots just walking off the cliff like lemmings every time.

          reply to this | link to this | view in chronology ]

          • identicon
            Dingledore the Flabberghaster, 30 Mar 2016 @ 11:00am

            Re: Re: Re: Re: That isn't why this is happening

            What on earth are you talking about?

            Whilst it could be valid to say that a dozen streaming providers all competing for the same produce might result in lower prices, it typically wouldn't result in that. You'd end up with the same situation that's on cable where shows are packaged together, meaning customers would have to effectively pay for shows that no one really watches.

            However, Netflix avoids this trap by creating their own shows. That's how they differentiate - and that's good for competition because it makes the competition ask how they can do similar but better - so Amazon produce shows, and Google may well.

            And have you actually checked your "exclusives" point? Pretty sure Netflix productions are available on Amazon too, and on Google Play.

            reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 29 Mar 2016 @ 4:38pm

      Re: That isn't why this is happening

      Exactly. In fact, we have a word for that where I come from: scapegoating.

      reply to this | link to this | view in chronology ]

  • icon
    Brian (profile), 29 Mar 2016 @ 11:20am

    old news in Canada

    Netflix has been doing this in Canada with wired ISPs for years now. They sent out an e-mail saying they were starting the practice. It was for the same reason: data caps that have been the (unfortunate) normal operating procedure for a long time. Customers can elect to change the bit rate back if they so desire. This was also communicated in the e-mail.

    I haven't seen any communications for the US wireless customers, but it sounds like they may have done a poor job letting people know what is happening and what their options are.

    Overall I don't actually have a problem with the practise so long as there are options available to put it back to a higher setting if desired and that customers are alerted to all this.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 29 Mar 2016 @ 11:37am

    Seems like a case of how can we force them to pay us money by throttling them, if they are throttling themselves.

    reply to this | link to this | view in chronology ]

  • identicon
    Jack, 29 Mar 2016 @ 11:52am

    Lets not forget the terrible Netflix practice of cutting video bitrate to prevent buffering when my $64/mo AT&T internet connection can't provide even 15% of the bandwidth I pay for. How dare Netflix cut the video quality and deprive me of the buffering I demand... YouTube, I'm looking at you too...

    reply to this | link to this | view in chronology ]

  • icon
    limbodog (profile), 29 Mar 2016 @ 12:07pm

    subtext

    We make money off overage fees, and you're cutting into our profits!

    reply to this | link to this | view in chronology ]

  • icon
    Ninja (profile), 29 Mar 2016 @ 12:13pm

    the telecom industry's various policy tendrils quivered in collective orgasm at the fresh opportunity for attack

    An opportunity that may quickly backfire as Netflix are specifically pointing out these morons have ridiculous usage caps that could mean either loss of connectivity or many dollars flushed down the overage fees. I would be glad if Netflix was careful enough to do that for me but would still give them a slap for not making it clear and opt-in.

    Also, free advertising for sprint and t-mobile I guess.

    reply to this | link to this | view in chronology ]

    • icon
      JoeCool (profile), 29 Mar 2016 @ 4:08pm

      Re:

      Given how providers will gladly let you run over your cap and send you a bill for thousands of dollars, this is one thing that should be OPT OUT, not opt in. With opt in, the first sign of trouble is that phone bill for $30,000.

      reply to this | link to this | view in chronology ]

  • identicon
    Capt ICE Enforcer, 29 Mar 2016 @ 1:21pm

    The real issue

    Sigh, the real issue is Netflix having to make their service worse because of artificial roadblocks set by cellular providers.

    reply to this | link to this | view in chronology ]

  • identicon
    naprotector, 29 Mar 2016 @ 1:21pm

    This bit sounds familiar and if were luck, the cable company might get their wish

    Netflix: Throttling is a violation of net neutrality
    Cable: Throttling is a creative form of competition
    Netflix: Violation
    Cable: Competition
    Netflix: Violation
    Cable: Competition
    Netflix: Competition
    Cable: Violation
    Netflix: Competition
    Cable: I say it is a violation and I want the judge to rule it as such right now

    reply to this | link to this | view in chronology ]

  • icon
    DannyB (profile), 29 Mar 2016 @ 1:33pm

    Isn't throttling the exclusive right of ISPs and network operators?

    How dare Netflix throttle its own traffic!

    Doesn't Netflix know that the only proper way to throttle traffic is to throttle someone else's traffic?

    If you are just one of the end points of a connection, why should you be allowed to decide how much traffic you want to send over the wire to the other party?

    Throttling of internet traffic should ONLY be allowed when you are being paid by one or both ends of a connection, and none of the data being throttled is coming from or intended for you. (eg, when the content itself is none of your business, then you can throttle it.)

    Doesn't Netflix throttling violate some kind of right that is exclusively reserved to networks?

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 29 Mar 2016 @ 3:27pm

    Re: Love the Snark in here

    However if some of these guys actually don't get the snark well... Clearly they don't understand the Technology.
    So, simply put your paying for access to the "Internet" through your ISP at a certain rate (and for unfortunates a quantity as well). These ISP's want you to consume what they provide so they give you a break (No Additional Cost to you to use stuff on their servers, then they were charging Netflix/Youtube/Etc. for them to be able to send data to you) since obviously you weren't paying for them to let you access what is on the web at a certain rate... Or better Description they were Cheating You and Netflix, Youtube, etc. Having them pay for service that you requested, then having providers (Netflix, Youtube, etc.) pay for service their Customers wanted access to. Meanwhile Netflix, Youtube, etc already pay their internet bill to be online. All because it competed with their service... Now they're complaining that Netflix is lowering it's default bandwidth on Carriers who are known to limit quantity (Network Usage Caps + $$$ if over) not every user understands how networks work. But that lunatic trying to compare Quantity of Data sent over a line like water in a pipe is well Asinine. The Quantity of Data flowing in the pipe is Rate, the Amount sent and received is what their data Caps are trying to make money from. So, imagine someone saying pay me $25-$170 to use this road a month but if you have more then 10 friends use it you'll need to pay an extra $10, if 20 friends visit then $20 etc. Roads already built sure there is some degradation over time from use, but it's not as much as entropy/weather so they'd be losing a penny or two from their profit, instead they're trying to capitalize on people's ignorance, not on some valuable limited commodity.

    reply to this | link to this | view in chronology ]

  • identicon
    Glenn, 29 Mar 2016 @ 4:02pm

    The cable industry is dumb as a post (you know, those pieces of wood that hold up fences... not the comments in forums and blogs--only some of those are dumb).

    Isn't it funny how it took years for no one to really notice any problem with picture quality at such "low speeds"? (tiny, tiny screens will do that, huh)

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 29 Mar 2016 @ 5:13pm

    More curiously perhaps, Netflix also admitted that it hasn't been throttling connections for users on Sprint and T-Mobile, because "historically those two companies have had more consumer-friendly policies" (read: they offer unlimited data plans).

    I don't find that curious at all. They throttle the customers who are at risk of thousand dollar bills to prevent them from dealing with that. They don't for customers who don't run that risk.

    The only thing I can fault them for is not telling their customers, but overall, it's clear they were looking out for their customers. Good job, Netflix.

    reply to this | link to this | view in chronology ]

    • identicon
      alternatives(), 30 Mar 2016 @ 12:38am

      exactly - WAS Re:

      They throttle the customers who are at risk of thousand dollar bills to prevent them from dealing with that.

      Customer support is a cost and sometimes the customer is an idiot you have to deal with.

      They have opted to avoid the issue of the hostile call about Netflix "causing" a big phone bill in this manner.

      reply to this | link to this | view in chronology ]

    • identicon
      Dingledore the Flabberghaster, 30 Mar 2016 @ 11:08am

      Re:

      It could arguably be the reason that Netflix didn't really advertise it. AT&T and Verizon would have had a field day if Netflix had said it openly at the start. As it is, Netflix has been shown to have taken the sensible option.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 29 Mar 2016 @ 5:13pm

    More curiously perhaps, Netflix also admitted that it hasn't been throttling connections for users on Sprint and T-Mobile, because "historically those two companies have had more consumer-friendly policies" (read: they offer unlimited data plans).

    I don't find that curious at all. They throttle the customers who are at risk of thousand dollar bills to prevent them from dealing with that. They don't for customers who don't run that risk.

    The only thing I can fault them for is not telling their customers, but overall, it's clear they were looking out for their customers. Good job, Netflix.

    reply to this | link to this | view in chronology ]

    • icon
      John Fenderson (profile), 30 Mar 2016 @ 6:14am

      Re:

      That's a pretty large fault, though. An even larger fault is that there is no way for the customer to tell Netflix they would prefer to have higher streaming rates.

      I think it's clear that Netflix made a misstep here. They may have had good intentions, but the execution is pretty bad.

      Poor job, Netflix.

      reply to this | link to this | view in chronology ]

  • icon
    Peter (profile), 29 Mar 2016 @ 11:43pm

    Did any customers complain? or even notice?

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 30 Mar 2016 @ 2:19am

    two tiered justice system after all. The more money you have or the better your political connections, then the less laws apply to your actions.

    reply to this | link to this | view in chronology ]

  • icon
    Whatever (profile), 31 Mar 2016 @ 10:04am

    Netflix is mad because the value proposition of their business only really works out when consumers can truly get "all you can eat". Netflix fails when your subscription ends up limited by a bandwidth cap or similar.

    The result? Netflix wants ISPs to drop caps and eat all the extra bandwidth and buildout costs to support their business model. Netflix can't yell "net neutrality" because a usage cap applies equally to all services and thus, is neutral. So they are forced to try to rename overage as a "fine" and to try to paint the ISPs as the bad guys, rather than admitting their own business model uses way too much bandwidth on mobile devices and might not be a particularly good use of limited available bandwidth.

    Netflix more and more comes off as a whining company who wants others to pay for their distribution costs. It would be like UPS forcing the government to build interstate highway off ramps for each house, just to speed up their deliveries...

    reply to this | link to this | view in chronology ]


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