UPDATE: JP Morgan analyst Doug Anmuth, who recently spoke with Netflix CEO Reed Hastings and CFO David Wells, tells Re/Code that Netflix has no belief or evidence that its service is being throttled.
Yesterday Netflix revealed some numbers on how it performs on various service providers, and as many suspected Netflix’s speed has been steadily dropping on Verizon and Comcast over the past four months.
This would seem to support the theory that providers are slowing Netflix down on purpose: As any profit-chasing corporation would, Verizon wants to charge companies with big customer bases and big data-loads like Netflix more for access to their customers. By manually slowing down or “throttling” Netflix, it could pressure them to cough up more cash. Furthermore, last month’s Net Neutrality court ruling, which made it so companies like Verizon were no longer required to treat all Internet content equally, would seem to pave the way for the slowdowns.
But is that what’s really happening?
First, we should note that Verizon denies that it treats Netflix any differently than other websites. A boilerplate corporate denial isn’t much to go on, but at least it’s something.
Also, the argument that this has anything to do with the Net Neutrality ruling is actually weakened by the release of Netflix’s performance stats: The numbers reveal that the slowdown started way back in September 2013, but the ruling was handed down just last month.
Could other factors be responsible for the slowdown?
As Ars Technica’s Jon Brodkin notes, Netflix and YouTube rely on “Internet bandwidth providers” that help ease some of their huge bandwidth burdens. Sometimes, carriers like Verizon will demand more money from these third-party go-betweens. But if these negotiations break down, Verizon can refuse to upgrade its infrastructure to support them, thus slowing down your favorite video sites. Even under the old Net Neutrality rules, this was entirely legal.
For Netflix’s part, it utilizes something called the “Open Connect” network which lets ISPs store cached content at exchange points that are close to customers. This speeds up streaming performance. But Verizon and Comcast have yet to join the “Open Connect” network. So while these providers may not be intentionally slowing down Netflix in attempt to maximize profits, by refusing to sign agreements with the companies that help Netflix move its bandwidth, it could effectively be doing the same thing.
If that’s the case, why did the declines only start in September? An Ars Technica commenter notes that was around the same time Netflix opened up “Super HD” and 3D to all users, regardless of whether the user’s provider was part of the “Open Connect” network. It therefore makes logical sense that Verizon and Comcast, who are outside the “Open Connect” network, would experience slowdowns around the same time.
The big takeaway from all this is that while the Net Neutrality ruling is very troubling, ISPs have already found ways to degrade performance without explicitly “throttling” the speeds of content providers. That said, it’s still uncertain if that’s exactly what’s happened here: These determinations are made through secret deals that have affect customers’ ability to enjoy certain types of content.
So while court rulings have a big impact on Net Neutrality, perhaps the best way to achieve it is through increased transparency for ISPs and the deals they strike.