Opinion
Netflix Video 'Throttling' May Be Annoying But Is Totally Legal
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Without net neutrality rules, cable companies would be able to use their market power to prioritize the content of whichever provider paid them and tilt the playing field in the favor of the paying party.
By Nicholas Economides
The FCC has no reason to investigate.
Telecommunication companies and cable providers are up in arms after finding out that for the past five years NFLX -1.86% Netflix has been lowering the quality of its video for customers watching its service on wireless networks, including those of AT&T and VZ -0.20% Verizon. However, Netflix did this in order to “protect consumers from exceeding mobile data caps,” which may discourage future viewing. While AT&T and Verizon failed to admit that reducing the quality of the movies would not have happened if they had not imposed download caps to begin with. And clearly, reducing the quality of its videos was not in the best interest of Netflix.
As telecommunication companies urge the Federal Communications Commission (FCC) to investigate Netflix for not adhering to net neutrality rules, I can’t help but think this looks a lot like the pot calling the kettle black. The direct commercial relationship between Netflix (or any upstream company, such as GOOGL 0.32% Google, MSFT 0.62% Microsoft or AMZN 0.81% Amazon) with its customers is not the subject addressed by the FCC’s net neutrality rules. That is, Netflix, Amazon, etc., can have direct relationship with their customers, charge whatever price the market will bear, and provide their content or other services at any feasible speed. This is correctly beyond the jurisdiction of the FCC.
Read the full article as published in Fortune.
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Nicholas Economides is a Professor of Economics.
Telecommunication companies and cable providers are up in arms after finding out that for the past five years NFLX -1.86% Netflix has been lowering the quality of its video for customers watching its service on wireless networks, including those of AT&T and VZ -0.20% Verizon. However, Netflix did this in order to “protect consumers from exceeding mobile data caps,” which may discourage future viewing. While AT&T and Verizon failed to admit that reducing the quality of the movies would not have happened if they had not imposed download caps to begin with. And clearly, reducing the quality of its videos was not in the best interest of Netflix.
As telecommunication companies urge the Federal Communications Commission (FCC) to investigate Netflix for not adhering to net neutrality rules, I can’t help but think this looks a lot like the pot calling the kettle black. The direct commercial relationship between Netflix (or any upstream company, such as GOOGL 0.32% Google, MSFT 0.62% Microsoft or AMZN 0.81% Amazon) with its customers is not the subject addressed by the FCC’s net neutrality rules. That is, Netflix, Amazon, etc., can have direct relationship with their customers, charge whatever price the market will bear, and provide their content or other services at any feasible speed. This is correctly beyond the jurisdiction of the FCC.
Read the full article as published in Fortune.
___
Nicholas Economides is a Professor of Economics.