Let’s get this out of the way: Netflix should not intentionally degrade the quality of its videos for subscribers who use Verizon and AT&T, especially if Netflix is not being transparent about what it’s really doing.
In case you haven’t heard, Netflix has been limiting video streams over AT&T and Verizon’s mobile networks to just 600 kilobits per second, which is the kind of speed you expect from a 3G connection and not a 4G connection. This slow delivery rate ensures that the picture quality on the video is far below what you’re used to getting when you watch Netflix over your home Internet connection, and Netflix should have at least told its customers up front about how it slowed down their streaming rates on purpose.
That said, let’s not let AT&T and Verizon off the hook.
The reason that Netflix decided to throttle its video quality on those carriers is all about how they handle users’ monthly data caps. In short, Verizon and AT&T both charge hefty overages to customers who exceed their monthly limits. And unlike T-Mobile and Sprint, Verizon doesn’t offer any kind of unlimited data plan option. AT&T recently brought back an option to subscribe to unlimited data, but only for customers who also bundled it with a DirecTV subscription.
The threat of getting hit with overage fees obviously makes people less likely to use your service while using mobile networks. Although it’s no fun having your data connection throttled after exceeding your monthly limit, that’s still better than having to fork over an extra $15 a month just because you used more than your allotted data.
All of this shows how wireless data caps distort incentives for content providers. Instead of competing with one another to see who can deliver the best-looking streams, they’re intentionally making their products worse so their customers don’t have to constantly worry about getting hit with overages. If wireline ISPs such as Comcast are allowed to implement such a system over their networks, it will further harm innovation on the web and leave us all with second-rate services.
So yes, Netflix deserves criticism for throttling AT&T and Verizon customers’ speeds and not telling them about it. Hopefully the company follows through on its promises to be more transparent about its operations and to give users more control over streaming video quality on their mobile phones. But the real problem here is still AT&T and Verizon’s decision to charge customers overage fees for going over their data caps and we shouldn’t forget it.