Yes, the Netflix-Verizon Feud Is About Net Neutrality

Julian Reyes/Fusion

Netflix and Verizon are entrenched in a finger-pointing battle ostensibly over connectivity issues, though in reality, the two are duking it out very publicly over Net Neutrality.

It all started last week when Netflix customer Yuri Victor tweeted a picture of the company displaying a message saying that the Verizon’s servers were crowded, shunting Victor to lesser playback quality.

Both sides have thrown jabs since then.

In a letter dated June 4, David Young, Verizon’s Vice President of Federal Regulatory Affairs, dismissed the claims and accused Netflix of being “deliberately misleading.”

“The source of the problem is almost certainly NOT congestion in Verizon’s network,” Young wrote in a blog on the company’s website. “Instead, the problem is most likely congestion on the connection that Netflix has chosen to use to reach Verizon’s network. Of course, Netflix is solely responsible for choosing how their traffic is routed into any ISP’s network.”

A day later, the ISP doubled down on its efforts and sent Netflix a “cease and desist” letter demanding that the latter take down their messages.

“The impression that Netflix is falsely giving our customers is that Verizon network is generally ‘crowded’ and troublesome,” wrote Randal S. Milch, Verizon’s General Counsel, in the letter. “This could cause a customer to think that any attempted viewing of video, whether it be Hulu, YouTube, or other sites, would yield a similarly ‘crowded’ experience, and he or she may then choose to alter or cease their use of the Verizon network.”

Verizon blamed the issue on Netflix mismanaging their data by using a cheaper middleman connection known as a Content Distribution Network (CDN). A CDN is a mirror that routes your home network over to a server, in this case the Netflix server.

Netflix countered with a letter of its own, placing the blame entirely on Verizon.

“As an ISP, you sell your customers a connection to the Internet,” David Hyman, Netflix’s General Counsel, wrote in response.

“To ensure that these customers get the level of service they pay you for, it is your responsibility to make sure your network, including your interconnection points, have sufficient capacity to accommodate the data requests made by those customers,” Hyman continued. “To try to shift the blame to us for performance issues arising from interconnection congestion is like blaming drivers on a bridge for traffic jams when you’re the one who decided to leave three lanes closed during rush hour.”

Both companies make good points in blaming the other, though this is more than just about a technical dispute. This isn’t just a shouting match over who’s at fault for Verizon customers receiving that message. At the heart of this issue is Net Neutrality, a subject where both companies find themselves on opposite sides of the argument.

Netflix has the highest internet bandwidth consumption in the United States, accounting for over 32 percent of nightly residential internet traffic. A drastic change in how the internet works, like the one proposed in the May 15 Federal Communications Commission’s hearings where ISPs could charge more for a “faster lane,”could severely jeopardize the company. As a result, Netflix and its CEO Reed Hastings have made it very clear that they are against the implementation of these new rules.

In a blog post titled “Internet Tolls and the Case for Strong Net Neutrality” Hastings wrote the following:

“ISPs sometimes point to data showing that Netflix members account for about 30 percent of peak residential Internet traffic, so the ISPs want us to share in their costs. But they don’t also offer for Netflix or similar services to share in the ISPs revenue, so cost-sharing makes no sense. When an ISP sells a consumer a 10 or 50 megabits-per-second Internet package, the consumer should get that rate, no matter where the data is coming from.”

For their part, Verizon appears to be hell-bent on getting rid of current regulations. A study by the Sunshine Foundation, published in the Daily Dot, revealed that the ISP spent more than $15 million to lobby against Net Neutrality. Earlier this year, the company also won a lawsuit against the FCC claiming that the government agency didn’t have the authority to enforce Net Neutrality because Verizon and other ISPs aren’t classified as “common carriers.”

Because the Internet isn’t a public utility, Verizon argued that companies that provide it shouldn’t be regulated as such. Verizon’s lawsuit—along with Comcast’s 2010 lawsuit against the FCC—were the impetus for the government agency’s May 15 hearings.

So why go after Verizon? After all, Netflix claimed in their letter that the on-screen messaging was something that they were doing for all their customers. But as of this writing, no images of Netflix singling out Comcast or Time Warner have emerged. Netflix has already agreed to pay both Comcast and Verizon to improve their connection speeds, but only Comcast has followed through with the deal.

Could it be that Netflix is using this technical dispute as a means to shift the conversation back to the subject of Net Neutrality? After all, Hastings and company can claim that they’ve played ball with the ISPs, agreeing to fork over money so that their service goes uninterrupted, only to have Verizon not hold up its end of the bargain.

This, of course, is pure speculation, but if true, it would be a shrewd move by Netflix given how visible the issue of Net Neutrality has been as of late (thanks in large part to comedian John Oliver’s recent call to action).

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