Netflix Applauds T-Mobile's Binge On, Forgets It Opposed Zero Rating Just Last Year

from the principles-for-sale dept

Last year, you might recall that Netflix took some heat for striking zero rating deals with Australian ISPs, exempting Netflix content from broadband usage caps. Australia was a relatively unique scenario in that the cost of transit is so high, most big content services had struck similar deals, and Netflix didn't want to put itself at a disadvantage in the newly launched Australian market by stubbornly holding on to neutrality principles. Still, it's worth recalling what Netflix said after a few weeks of criticism:
"Data caps inhibit Internet innovation and are bad for consumers. In Australia, we recently sought to protect our new members from data caps by participating in ISP programs that, while common in Australia, effectively condone discrimination among video services (some capped, some not). We should have avoided that and will avoid it going forward. Fortunately, most fixed-line ISPs are raising or eliminating data caps in line with our belief that ISPs should provide great video for all services in a market and let consumers do the choosing."
And what it specifically said about zero rating content:
"Zero rating isn't great for consumers as it has the potential to distort consumer choice in favor of choices selected by an ISP."
Fast forward to 2016, and Netflix is suddenly throwing its support behind T-Mobile and its controversial Binge On zero rating program. Speaking on the company's earnings call this week, Netflix CEO Reed Hastings praised Binge On, which throttles every shred of video that touches the T-Mobile network to 1.5 Mbps, whether or not consumers or content partners asked it to. According to Hastings, he's thrilled about the program because it has driven more usage to Netflix:
"It’s voluntary to the customer. Every customer of T-Mobile can decide to turn it on or turn it off," Hastings explained on an earnings call today. "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." Netflix may be more inclined to defend this program because the company benefits from it: Hastings says that Netflix is seeing more viewership from T-Mobile customers — no surprise since it makes "unlimited video consumption possible." Hastings added that he hopes these kinds of programs expand further."
But as the EFF has pointed out, the fact that users can opt out is irrelevant. T-Mobile's been throttling every shred of video that touches its network to 1.5 Mbps (streamed or direct downloaded) by default, and then lying about it. Critics like YouTube and the EFF have, quite correctly, pointed out that such a program should be opt-in, for both consumers and content partners. The other problem is simply one of precedent; let T-Mobile dick about with how content gets treated, and that opens the door to every carrier modifying traffic to their own benefit.

By refusing to ban zero rating outright, the FCC has opened the door to a flood of similar ideas that are even worse and, cumulatively and aggressively, are eroding the idea of an open Internet. Worse, it's happening to the thunderous applause of some consumers, who think they're being given a gift when an ISP imposes utterly arbitrary usage caps, then graciously allows select content to bypass said caps. Make no mistake though; the act of fucking about with traffic in this fashion is an assault on net neutrality. That many people don't understand this yet (or are eager to ignore the fact when it benefits them) doesn't magically make it less true.

A few years ago, Netflix's Hastings went on a Facebook rant about how Comcast was unfairly letting its own streaming services bypass the company's usage caps. But now that Netflix is seeing benefits from zero rating, it's apparently willing to throw its principles in the toilet. Netflix may want to be careful where it treads. As some companies have discovered, zero rating isn't your friend -- and the special treatment that benefits you today may come back to bite you tomorrow.

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  • icon
    That One Guy (profile), 21 Jan 2016 @ 4:53am

    Nice business you got there, shame if something were to happen to it...

    "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."

    To which the response is:

    Yet.

    'Netflix, your traffic looks like it's causing a pretty hefty strain on our networks. Now, we love having you in our program that zero-rates your content, but purely for maintenance costs going forward we're going to have to ask that you pay a small fee if you want your content to continue to be zero-rated. We assure you, this is strictly related to maintaining the networks and making sure that they can handle the load your content is putting on it, and has nothing at all to do with charging you to use our networks, since clearly that would be against the FCC's rules.

    If you do not wish to pay our completely reasonable costs, we're afraid that, for the sake of keeping our networks clear, we'll have to drop you from the program and have your content count against the caps we've imposed. You understand, right?'

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

    • icon
      PaulT (profile), 21 Jan 2016 @ 6:59am

      Re: Nice business you got there, shame if something were to happen to it...

      The other response is to this part:

      "Many of our competitors such as Hulu and HBO are in the program also."

      2 problems here. First, the "many" implicitly admits that there are competitors who aren't involved, which means that the playing field is already skewed. The second is that the main concern with net neutrality disappearing isn't just whether Hulu and Netflix are at the same level. It's whether the next new innovative service ever gets traction because potential new customers are forced to remain with the existing players by speed, bandwidth costs, or other factors.

      It's a pity, given that Netflix owe its business to a neutral playing field. If Blockbuster or Comcast could have gamed the field in their favour when Netflix were starting to be disruptive in those respective markets, they may never have got to this point of success.

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

  • identicon
    Anonymous Coward, 21 Jan 2016 @ 6:47am

    A company okay with things they weren't okay with before because now they're benefitting from it? Paint me green and call me Anonymous Percy!

    You don't need to ask why the scorpion stings and you don't need to ask why a business is amoral and self-serving.

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

  • icon
    PaulT (profile), 21 Jan 2016 @ 6:53am

    "Hastings says that Netflix is seeing more viewership from T-Mobile customers — no surprise since it makes "unlimited video consumption possible"

    Sounds like the same doublespeak that comes out of companies trying to sell DRM as a consumer benefit. The problem is, this doesn't make anything "possible" that's not possible on a technical level without additional restrictions. It's the business/investor level where things suddenly become tricky.

    Like the DRM rubbish, it's all doublespeak, and idiotic misinformation to people who know what's really happening. Every Netflix account has a solid limit as to how much video can be consumed, as each account has a limit to the number of devices. If you have an account that allows 2 devices to stream simultaneously, then obviously an "unlimited" amount of video data can never exceed 336 hours per week (24x7x2), and everyone will consume less than this in reality.

    Outright lying about how restrictions on the client end suddenly makes things possible is just that - lies and misinformation.

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

  • identicon
    Anonymous Coward, 21 Jan 2016 @ 6:58am

    I'm trying to get my head around data caps , they make no sense ..networks (all) should be fully capable of handling all and any traffic that get thrown at them .. they need to stop making cave paintings of how terrific their networks are and start making it happen.

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

    • identicon
      Anonymous Coward, 21 Jan 2016 @ 8:01am

      Re:

      You're correct. Data caps do not reduce network congestion or assist in any way except filling the pockets of the imposing corporation. Comcast has admitted as much - that the caps are purely a business decision, not a technical one.
      As much as ISPs would love to make the comparison to car fuel or tap water, data is an infinite resource and the only significant costs to the company are maintenance and building the actual infrastructure - once the physical cables are in the ground, the upkeep costs are negligible. Ergo, bandwidth is the only thing that should actually be considered when determining pricing - if I have a 100mbps connection, Verizon's upkeep cost is the same whether I download 100MB or 10TB.

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

      • identicon
        Anonymous Coward, 21 Jan 2016 @ 12:52pm

        Re: Re:

        You have over simplified this.
        You ---- ISP ---- rest of the Internet

        The bandwidth cost between you and the ISP is a fixed cost.

        The bandwidth cost between the ISP and the rest of the Internet is variable based on usage.

        The problem is ISP want to sell you one speed and hope you use a much lesser speed thus reducing their cost. If the ISP charged you what it cost to have guaranteed speed to the rest of the Internet your monthly bill would be much higher.

        Things get cheaper at scale but below 100Mbps paying around $30/1Mbps/Mo is what guaranteed bandwidth really costs. Want 50M, cough up $1500/Mo

        If you are paying less than that then your bandwidth is just best effort and you already know that most ISP make little effort.

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

    • identicon
      Anonymous Coward, 21 Jan 2016 @ 9:42am

      Re:

      Whenever I hear people cluelessly talk about how lots of data clogs the internet, I am always reminded of this comic from Dilbert.

      http://dilbert.com/strip/2006-02-22

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

  • icon
    DannyB (profile), 21 Jan 2016 @ 7:32am

    Make no mistake. This is ANTI Consumer

    You think you're getting free bandwidth for Netflix?

    Think again. You ARE paying for this. But in a sly, underhanded way. Through increased costs of Netflix.

    Why can't my ISP just charge ME for the bandwidth that I AM USING. It's not Netflix using bandwidth. It's ME who is using the bandwidth.

    And this is true whether I'm watching Netflix, YouTube, Hulu, PBS, TED, or any other of a zillion video sites.

    Just charge me, reasonably, for my network bandwidth use, and leave the structure of the internet alone. Don't start distorting the market or incentives.

    One more thing. Dear ISP. Your job is simple. Just do one thing well. Route packets on the network. That's it. You don't need to inspect traffic. You don't need to care where it goes to or comes from. Treat all destinations equally -- after all, you should do no more than routing it to/from a backbone. Just get packets from the backbone to my house, and vice versa. That's it. Do it better than your competition. You will have loyal customers.

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

    • identicon
      Anonymous Coward, 21 Jan 2016 @ 9:00am

      Re: Make no mistake. This is ANTI Consumer

      Confusion makes money.

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

    • identicon
      Alex, 21 Jan 2016 @ 10:15am

      Re: Make no mistake. This is ANTI Consumer

      Netflix is not being charged to participate in BingeOn.

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

      • icon
        DannyB (profile), 21 Jan 2016 @ 1:23pm

        Re: Re: Make no mistake. This is ANTI Consumer

        Whether Netflix is charged or not, the consumer, that's me, is ultimately paying for the bandwidth I use.

        Why not just straightforward and honest about charging me for the bandwidth I use?

        What's the catch then? Why does Netflix get special zero-rated treatment, while other video services do not? It is fundamentally unfair to me that Netflix gets zero-rated bandwidth, but FoorbarVideo does not get zero-rated bandwidth. If Netflix doesn't have to pay, then why not just let all services have zero-rated bandwidth?

        If Netflix is not being charged, then I should expect to not hear any complaining about "how much bandwidth Netflix uses". On their end of the connection, Netflix pays their bandwidth bill, and quite handsomely I'm sure.

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

  • identicon
    Anonymous Coward, 21 Jan 2016 @ 7:35am

    the problem here is that Netflix hoped everyone else had forgotten about last year!

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

  • identicon
    Anonymous Coward, 21 Jan 2016 @ 7:37am

    Bye bye Netflix, Hello piracy

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

  • icon
    TechDescartes (profile), 21 Jan 2016 @ 8:29am

    Reed: His Mind

    Zero rating isn't great for consumers as it has the potential to distort consumer choice in favor of choices selected by an ISP...
    ...but it's great for me!

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

  • identicon
    Anonymous Coward, 21 Jan 2016 @ 9:39am

    Opting out of Binge On


    But as the EFF has pointed out, the fact that users can opt out is irrelevant. T-Mobile's been throttling every shred of video that touches its network to 1.5 Mbps (streamed or direct downloaded) by default..


    You are implying that a user who 'Opts out' will be throttled. I think you should read the EFF findings again. Binge-on enables throttling for ALL data. Opting out returns the user to a completely un-throttled state.

    Now whether or not this is acceptable is another story, at least get your story right.

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

    • icon
      PRMan (profile), 21 Jan 2016 @ 10:12am

      Re: Opting out of Binge On

      I tried Netflix with Binge On on and off. It was clearly 480p when it was on and clearly 1080p when it was off.

      I'm really not seeing the problem. OK, opt-out is kind of bad, but if they've been advertising it all over TV and if you log into your account either online or on your phone, there are clear descriptions of what it is and a giant button to turn it off on the first page.

      This is about as unobtrusive as something like this CAN be.

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

  • icon
    nasch (profile), 21 Jan 2016 @ 6:45pm

    Principles

    But now that Netflix is seeing benefits from zero rating, it's apparently willing to throw its principles in the toilet.

    So they probably weren't really principles, but rather PR.

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


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