Double Standard Protects Netflix from Competition

WASHINGTON, D.C. —­­  Today, Netflix announced a new tool that will allow users to adjust the quality of the video they stream over their mobile network, so that they can avoid using up too much of their monthly mobile data plan. This tool is similar to the function that T-Mobile offers its customers with its Binge On tool, except that T-Mobile adjusts video quality for all video. Both the Netflix app and the T-Mobile network automatically adjust video quality, but users can opt-out of Binge On and the Netflix app offers multiple quality settings. T-Mobile has been accused of violating the FCC’s Open Internet Order’s ban on “throttling” Internet use.

“Three cheers for Netflix for user empowerment, but there’s no principled reason why broadband operators shouldn’t be able to give users the same option,” said Berin Szóka. “The rhetoric for ‘net neutrality’ has always been about user empowerment. But the FCC wound up writing a hard-line rule that seems to completely ban broadband providers from adjusting video quality even if users want that. That’s crazy. It means consumers won’t get the kind of master interface that can manage quality across all video platforms — which, in turn, would make ordinary users comfortable experimenting with multiple video platforms.”

“Helping users ration their data is great for consumers, but the FCC’s strict ‘net neutrality’ rules put that burden solely on apps themselves,” continued Szóka. “Internet providers are obviously in a better position to do this in a more comprehensive and convenient way across multiple platforms — whereas Netflix can only manage its own. For example, T-Mobile’s Binge On lets its users ration all their video consumption — not just Netflix. Of course, it’d be great if T-Mobile could allow its users to adjust video quality across a variety of apps or toggle Binge On app by app, but even that would be illegal under the FCC’s crazy rules. Netflix was arguably the biggest cheerleader for strict net neutrality, and it’s only too perfect that the ban on one-stop-shop controls is protecting the company from competition.”

In late March, a Wall Street Journal exposé revealed that Netflix had been surreptitiously throttling its users on the AT&T and Verizon mobile networks (which allowed customers to buy extra data) but not T-Mobile and Sprint (because they automatically reduced video streaming speeds once customers exceeded their monthly data plans). In acknowledging the throttling, Netflix promised it would soon roll out the tool announced today. TechFreedom awarded Netflix its first Tech Hypo(crite) award, explaining that, while Netflix was not technically subject to the Open Internet Order, its practice did very much violate the expanded concept of “Net Neutrality” pushed by the company.

“In theory, it’s possible that Apple, Google and Microsoft could build such data-rationing tools into their operating systems, but that hasn’t happened yet, and probably for good reason,” concluded Szóka. “Since they don’t control the network, they’d have to interface with each streaming service. That might work, but it would probably take years to get off the ground. And it’s far from clear it would work well, or consistently across operating systems — without cooperation from the ISP. And that, in turn, would probably allow the FCC to rule that the tool was being ‘used to evade the protections [of the no-throttling rule]’  — and ban it, too. Finally, there’s no reason that such data-management tools should be limited to mobile broadband, but of course, the FCC would be even more hostile to wireline ISPs offering them.”

Szóka’s March 25 blog post provides further analysis.

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