TIME technology

Why Netflix Is Backing This Huge Cable Merger

FRANCE-ENTERTAINMENT-INTERNET-FILM-TELEVISION-NETFLIX
Francois Guillot—AFP/Getty Images Netflix Co-founder and CEO Reed Hastings poses during a photocall for the launch of Netflix in France on September 15, 2014 in Paris.

It's totally okay with Time Warner Cable and Charter tying the knot

A proposed $55 billion merger between cable companies Charter and Time Warner Cable has a perhaps surprising ally: Netflix.

Netflix was a vocal opponent of last year’s proposed merger between Time Warner Cable and Comcast. But the streaming movie company on Wednesday pledged its support for the potential hook-up between Time Warner Cable and Charter through an FCC filing. Netflix’s bonhomie towards the new deal revolves around an issue Netflix has been crowing about for months: Interconnection, or a physical link between a network belonging to a carrier (like Charter or TWC) and that of a content provider (like Netflix).

Put simply, such interconnection agreements can help ensure bandwidth-intensive services like online video can be smoothly delivered to users’ devices without the horror of buffering. But they’ve become a matter of contention. Last year, Comcast got into a public spat with Netflix after it made the unprecedented demand that Netflix pay up for interconnection. Comcast argued it was only right for Netflix to shell out for the high degree of bandwidth it uses; Netflix countered such an arrangement would violate rules against unequal treatment of Internet traffic and shift more costs to consumers. Netflix eventually capitulated, later agreeing to similar paid interconnection deals with Verizon and TWC.

As part of its campaign to get its merger with TWC approved, Charter has agreed to make interconnection agreements with companies like Netflix for free — at least until the end of 2018. The collapse of the Comcast-TWC deal, which was not expected to pass muster with the FCC, likely got Charter to offer Netflix these generous terms in hopes of getting its deal approved.

In its quarterly letter to shareholders, Netflix praised Charter’s decision to not charge for interconnection. “This move ensures that all online video providers can aggressively compete for consumers’ favor, without selective and increasing fees paid to [Internet Service Providers],” the company wrote. “Charter’s interconnection policy is the right way to scale the Internet. It means consumer will receive the fast connection speeds they expect.”

In a conference call with investors Wednesday, Netflix CEO Reed Hastings said he hoped the government would impose a similar mandate on AT&T and DirecTV to approve their proposed merger. So far, Hastings’ strategy has been effective. “It frees us up from worrying about getting taxed by an ISP,” he said about Charter’s free interconnection. “Instead, we get to worry about how do we make our experience better for consumers.”

TIME legal

What to Know About Google’s Fight With Europe

Google and European Union logos are seen in Sarajevo, in this April 15, 2015 photo illustration.
Dado Ruvic—Reuters Google and European Union logos are seen in Sarajevo, in this April 15, 2015 photo illustration.

The search giant faces charges of anticompetitive behavior in Europe

A new antitrust complaint filed against Google by the European Union Wednesday could force the company to pay huge fines and change the way its search engine operates in Europe.

In the complaint, EU regulators say Google has abused its dominance in online search to stifle competition. If the charges stick, Google could face a cascade of antitrust allegations over a variety of its other services as well.

Here’s a quick explainer of why European officials are targeting Google and how the search giant has responded so far.

What is the European Union saying Google did wrong?

The formal accusation is tied to the way Google displays its shopping comparison product, Google Shopping, in search results. Items from Google Shopping are displayed at the top of the search results page when users search for many basic products, like “kites” or “dog food.” According to the EU, automatically placing Google’s own service in this prized digital real estate could “artificially divert traffic from rival comparison shopping services and hinder their ability to compete, to the detriment of consumers, as well as stifling innovation.”

Why does it matter whether Google promotes its rivals equally?

Google controls more than 90% of the search engine market share in most European countries, compared to about 65% market share in the U.S. According to Google’s rivals, such as Yelp and Microsoft, that control over search gives Google incredible influence over the viability of other companies that rely on search results to drive web traffic and generate business.

What is Google’s counterargument?

In a blog post Wednesday, Amit Singhal, Google’s senior vice president for Search, points out that traffic to Google Shopping is still dwarfed by sites like Amazon and eBay in European countries and does not significantly outpace other competitors. He also cited the successful IPO of German shopping site Zalando as proof that competition was not being stifled by Google Search.

“Any economist would say that you typically do not see a ton of innovation, new entrants or investment in sectors where competition is stagnating — or dominated by one player,” he wrote. “Yet that is exactly what’s happening in our world.”

How long has the European investigation been going on?

Officials began a general investigation into Google’s search practices in November of 2010. After years of back and forth, Google reached a tentative settlement with the European Commission in February 2014 in which the company agreed to place competitors’ search results at the top of the results page along with results from Google’s services. However, the settlement was ultimately rejected later in the year. Now the EU has a new antitrust chief, Margrethe Vestager, who has taken a harder line against Google.

What punishments could Google face?

The European Union can collect fines as large as 10% of annual sales for violation of antitrust law. In Google’s case, that would amount to more than $6 billion, though it isn’t clear if a final fee would go that high. The company could also be forced to change the way its search engine works — in its charges, the European Commission says Google should treat its own comparison shopping service the same as that of its rivals by showing whatever results are most relevant based on a user’s search query.

Google will have ten weeks to respond to the EU’s allegations in hopes of avoiding a big fine.

Is this only about Google Shopping?

No. The European Commission also announced that it’s opening an antitrust investigation into Android, Google’s mobile operating system. The Commission will consider whether Google pressured manufacturers who use Android on their devices to pre-install Google’s own apps. It will also seek to learn if Google prevented manufacturers from developing modified versions of Android in a manner that runs afoul of antitrust law.

For its part, Google argues Android has helped spur mobile innovation and that its practices are not out of line with the way Apple and Microsoft control their mobile ecosystems.

The Commission is also continuing to investigate how Google prioritizes its own specialized results in other specific fields, such as flights, and the kinds of restrictions the company places on advertisers.

Could Google face similar scrutiny in the U.S.?

It’s doubtful. The Federal Trade Commission launched an antitrust investigation into Google in 2011 but ultimately filed no legal charges against the search giant. A recently disclosed internal report, however, revealed the FTC was closer than initially believed to filing charges against Google.

Has this ever happened before?

American tech giant Microsoft long sparred with European regulators over antitrust concerns regarding the Windows operating system and Internet browsers. Microsoft initially got away without a fine by agreeing to offer new Windows users in Europe a wider choice of browsers. However, Microsoft was fined $732 million in 2013 when it was found not to be complying with that deal (Microsoft blamed technical errors). Some commentators argue Microsoft’s dealings with European regulators changed the company’s culture in profound ways.

Read next: How Google Perfected the Silicon Valley Acquisition

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TIME legal

This Country Just Banned Revenge Porn

TIME.com stock photos Computer Keyboard Typing Hack
Elizabeth Renstrom for TIME

New U.K. law cracks down on many kinds of online abuse

The United Kingdom is cracking down on people who share nude photos of their exes without their consent, a practice known as revenge porn.

Under the U.K.’s new Criminal Justice and Courts Act enacted Monday, anyone who discloses private sexual photographs of another person with the intent to cause distress could be prosecuted. Violating the new law carries a punishment of up to two years in prison, a fine or both. The law applies to photos shared both online and offline, according to The Telegraph.

The new law marks the U.K.’s first time revenge porn has been listed as a specific crime.

The U.K. is also cracking down on Internet trolls through the new act. Punishment for abusive messages that have the “intention of causing distress or anxiety” will be punishable by up to two years in prison, up from a six-month maximum under previous rules.

TIME Tech Policy

Here’s Why Russia Is Cracking Down on Google

A model of the Android operating system logo at the Mobile World Congress in Barcelona, Spain, on Feb. 27, 2012.
Bloomberg via Getty Images A model of the Android operating system logo at the Mobile World Congress in Barcelona, Spain, on Feb. 27, 2012.

The search giant's Android platform is at the center of complaints

Google may be running afoul of anti-monopoly laws in Russia. The country’s regulators are investigating the way the search giant bundles its apps onto Android devices in response to a complaint by Yandex, Russia’s leading search engine, according to The Guardian.

Yandex is taking issue with the fact that smartphone makers have been blocked from pre-installing the company’s services, which compete with Google’s, on Android phones in the country. Google restricts which apps can be pre-installed on the most popular version of Android. A fully open-source version of the software, which is used to power mobile operating systems used by Amazon and Xiaomi, is freely available but doesn’t include access to the Google Play store.

Google has faced legal scrutiny in multiple markets for the way it controls the Android ecosystem. In Europe regulators are reportedly planning to launch a formal inquiry into Google’s mandates regarding pre-installed apps, according to Reuters. In the U.S. a lawsuit claiming that Google harms smartphone buyers by forcing Samsung and others to pre-install Google apps on their Android phones was dismissed by a federal judge last week.

Read next: Why Chevron Is Helping Fund STEM Education

TIME privacy

How AT&T Wants You to Pay For Your Privacy

AT&T Reports 81 Percent Rise In Q2 Profit
Tim Boyle—Getty Images An AT&T logo is displayed on an AT&T truck July 25, 2006 in Park Ridge, Illinois.

ISP can track your web history and searches

The privilege of not having your every click tracked, saved and regurgitated in the form of targeted ads will only cost you $29 per month on AT&T’s super-fast Internet service.

The company, which just announced it’s bringing its 1-gigabit-per-second service to Kansas City, touts a price tag of $70 per month for the high-speed connection meant to compete with services like Google Fiber. But that’s actually a “premier” offering that allows AT&T to track a user’s search terms and browsing history to serve targeted ads. The standard high-speed service without the tracking costs $99.

AT&T defended the pricing model to The Wall Street Journal by arguing that the ad targeting helps AT&T make more money, which in turn lets customers who participate earn a discount. The model is somewhat similar to the discounted Kindles Amazon sells that show advertising. Companies with free, ad-based services, like Facebook, don’t allow users to fully opt out of being tracked while on their sites.

However, the fact that AT&T is an Internet provider means it could gather a more comprehensive picture of your Web browsing activities than companies with a less intrusive presence. That’s lucrative for advertisers and for ISP’s, but not so great for privacy-minded end users.

TIME policy

Google Spent Even More on Lobbying Than Comcast in 2014

Google headquarters in Mountain View, Calif. on Jan. 30, 2014.
Justin Sullivan—Getty Images Google headquarters in Mountain View, Calif. on Jan. 30, 2014.

Outspent the cable giant currently seeking approval for a merger

Google’s influence is increasingly being felt in Washington, according to a corporate spending watchdog.

The search giant spent $16.83 million on federal lobbying in 2014, according to public records analyzed by public interest nonprofit Consumer Watchdog — just a little bit more than the $16.8 million spend racked up by noted big spender Comcast last year, as it sought to win approval for a planned $45 billion merger with Time Warner Cable.

Google is also spending considerably more than its direct competitors, such as Microsoft, which spent $8.33 million on lobbying efforts, and Facebook, which spent $9.34 million. In fact Google’s spend was the largest of 15 tech and communications companies that Consumer Watchdog tracks, including Verizon, Time Warner Cable and IBM.

As Google continues to expand to new business ventures, such as its just-announced contribution to a $1 billion investment into SpaceX, the company must wrangle with an ever-growing list of laws and policies. The Washington Post pulled back the curtain a bit on how Google spends its lobbying dollars earlier this year, revealing that the tech giant regularly funds research at think tanks and invests in advocacy groups on both sides of the political aisle.

Current political issues that would likely be of high interest to Google include the revamping of net neutrality laws and President Obama’s new initiative to ensure that cities are able to build their own municipal broadband networks, which could lead to faster Internet for customers.

TIME Tech Policy

Netflix Is Paying AT&T To Make Movies Stream Faster

Netflix Garners Two Top Show Nominations With 'Cards,' 'Orange'
Bloomberg—Bloomberg via Getty Images The Netflix Inc. application (app) displays the "Orange is the New Black" series on an Apple Inc. iPhone 5s in this arranged photograph in Washington, D.C., U.S., on Wednesday, July 9, 2014.

After already making similar deals with Comcast and Verizon

Despite its public war against interconnection fees, Netflix has signed another paid peering deal with an Internet Service Provider to improve the quality of its streaming and reduce buffering for its subscribers.

“We reached an interconnect agreement with AT&T in May and since then have been working together to provision additional interconnect capacity to improve the viewing experience of our mutual subscribers,” Netflix spokesperson Anne Marie Squeo said in an emailed statement. “We’re now beginning to turn up the connections, a process that should be complete in the coming days.” AT&T spokesperon Mark Siegel offered a nearly identical statement. Netflix will pay AT&T for this additional capacity, but the payment amount hasn’t been disclosed.

Such fees have become a hotly debated topic among Internet giants this year. Netflix believes it shouldn’t have pay ISPs like AT&T to deliver its video content because consumers are already paying for Internet access. The streaming service argues that these tolls could be used to discriminate against certain Internet companies, and it has conflated the issue with the ongoing debate about net neutrality.

The ISPs disagree. In a March blog post, AT&T executive Jim Cicconi called Netflix “arrogant” for trying to dump its cost of doing business on all subscribers to an ISP. “When Netflix delivered its movies by mail, the cost of delivery was included in the price their customer paid,” he wrote. “It would’ve been neither right nor legal for Netflix to demand a customer’s neighbors pay the cost of delivering his movie.”

For now Netflix has come to an uneasy truce with AT&T in a deal similar to those already established with Verizon and Comcast. But the company is lobbying to get these tolls outlawed when new rules for net neutrality are drafted by the Federal Communications Commission later this year.

TIME Tech Policy

Meet the Woman Keeping Silicon Valley in Check

Cade Martin 2014 Federal Trade Commission Chairwoman Edith Ramirez

Edith Ramirez is probably not the most popular person in Seattle right now. As the chairwoman of the Federal Trade Commission, she’s currently suing two of the city’s biggest tech companies: Amazon, for allegedly making it too easy for kids to rack up in-app purchases on their parents’ Kindles, and T-Mobile, for allegedly cramming unwanted charges into customers’ phone bills. That’s to say nothing of the recent settlements with Snapchat over false marketing and Apple over in-app purchases. It’s all come under the watchful eye of Ramirez, who assumed the chairwoman’s position in March 2013 and has taken a laser focus to the activities of tech companies, particularly in regards to mobile.

The new FTC head talked to TIME about the hidden permissions lurking in terms of service agreements, Facebook’s controversial mood study and whether Americans should ever expect a “right to be forgotten” online. An edited version of the conversation is below.

TIME: How important is the technology sector as a whole for the FTC right now? Is it an area of focus for you personally?

Ramirez: Our fundamental mission is to protect consumers and promote competition and so we are going to be wherever consumers are. The reality is that technology has been playing a critically important role for the agency for a number of years. Because we see consumers really gravitating to mobile devices, it’s crucial that the agency be very much informed about and keenly aware of what’s happening in the mobile sphere.

TIME: What are the biggest challenges or dangerous that consumers can face with the rise of mobile?

Ramirez: You want consumers to be able to partake in all of the terrific innovation we see in the marketplace. One way to assure that is to make sure the products that are out there take into account what’s of concern to consumers—that includes, among other things, taking into account concerns about data security and privacy, and also making sure that some of the basic protections that we’re all used to when we walk into a grocery store or a local convenience store, that we also have those basic protections available to us when we’re engaging in a transaction on our smartphone.

Data security is paramount in my view. The more connected we are, the more information and data that is being gathered by all sorts of different companies. It’s crucial that this personal information that is being collected and being used, that companies take reasonable steps to ensure that data is protected.

TIME: We live in this era now where people sign up for services and they don’t read the fine print. Do you think there’s a base level of privacy or control that Internet companies should be affording their customers?

Ramirez: I do. We realize that consumers aren’t going to be poring over long, confusing privacy policies. Now that we’re in a mobile world, what’s the likelihood that anyone’s going to be scrolling through on a mobile device some lengthy privacy policy? That’s become increasingly unlikely.

Companies need to be thinking about privacy from the get-go, when they first start conceiving of any new product or service. If you’re developing an app that’s a flashlight app, do you really need to have access to my contacts? Do you really need to have access to my geolocation? If they want to access information that goes beyond what one would expect, they ought to be asking for permission to do that.

I think we’ve seen a tremendous improvement, even in the course of the time I’ve been at the agency. We’ve seen companies realize that consumers really do care very deeply about maintaining their information [security] and they want to also exercise greater control. At the same time I think a lot more needs to be done in this area. A lot in this area still continues to take place behind the scenes in a black box. Consumers may not fully appreciate the extent of data-sharing that’s taking place.

TIME: Last month people were upset because Facebook did this experiment where they were altering people’s News Feeds to change their mood in some way. Do you think that experiment was appropriate for them to do?

Ramirez: I can’t really comment on the specifics of what Facebook did, but I think what it does show is again the need for consumers to be in the driver’s seat. They want to know what companies are doing, how they’re using the information that they’re sharing. It just goes to show that consumers don’t want to be in the dark about this. That’s a basic responsibility companies have—they ought to be transparent about what they’re doing, they ought to give consumers an opportunity to have control over how their information is being used, what information is being collected. Simply because [consumers] are receiving a service, and even it happens to be free, that doesn’t mean they don’t want to be in control.

TIME: Does the FTC plan to investigate the Facebook issue formally?

Ramirez: We can’t comment on how investigations we conduct. What I can tell you is these are issues we are concerned about and we are monitoring the marketplace.

TIME: In Europe, the courts recently enshrined a “right to be forgotten,” so people can delete articles about themselves from search results. Do you think that’s something Americans should have the right to for privacy reasons?

Ramirez: Of course we’re operating here in the U.S. under a very different legal regime than folks are in Europe. An expansive “right to be forgotten” is not something that’s likely to pass Constitutional muster here in the United States because there is a First Amendment right to both access to public information and freedom of expression. At the same time, I do understand the need for us to think about controlling our own information. By way of example, I know that consumers want to be able to delete information. If they’re on a particular platform, they will want to be able to be assured that if they close out their account that their information will be deleted. This is exactly an element of an order we have with Facebook. It’s not an expansive right to be forgotten, but there are certain controls and tools that I think U.S. consumers would like to have.

TIME: As we see these tech companies like Google and Amazon getting bigger and bigger, taking up a larger portion of their sectors, do you think there are antitrust issues with these companies as they continue to grow?

Ramirez: With any large company, if they have market power, monopoly power, we would be looking closely at how they use that. We did conduct an investigation relative to Google a couple of years back. In that particular investigation, we opted not to take action.

TIME: A lot of times when FTC settlements come out, people see the dollar figure, and it seems like a slap on the wrist to these companies that are generating billions of dollars in revenue every year. Are the actions you take actual deterrents to stop companies from abusing consumers in various ways?

Ramirez: We do not have general civil penalty authority. We can’t assess a fine when we find a violation of law under our general statute. What we can do is seek to obtain consumer redress or we can, if appropriate, ask a company to disgorge any unlawful gains that resulted from the unlawful conduct.

In any particular case, the amount that you may see, you may think, ‘Well how does that compare to the profits of a company?” But that’s not really the analysis. The analysis on our end is, “Are we successfully recovering money that would compensate consumers for the damage that they have suffered.”

I think our enforcement work is sending important signals to the marketplace. In the privacy arena, Facebook, Google, Twitter [are] under order. It’s sent important signals to them, and I think as a result of the action that we’ve taken, companies are more aware of what their responsibilities are.

TIME: How are you able to strike a balance between this goal of consumer protection and allowing companies to innovate and try new things?

Ramirez: Whether it’s having information about what you’re paying for, whether it’s knowing what information an app might want to have access to when I’m downloading it—all of these things really work side by side with innovation. I don’t think consumers should have to sacrifice their privacy, the security of their information…when they avail themselves of all these terrific products that we see today. In fact I think for companies to flourish, it’s really important that consumers feel they can trust the products that they’re using, that they feel that they know the full extent of what is happening when they download a service. Companies will flourish all the more if they provide basic protections.

TIME Tech Policy

Why Twitter and the Rest of Silicon Valley Should Disclose Their Diversity Data

Twitter's IPO Spurs Horse Race Among Exchanges Seeking Listing
Bloomberg/Getty Images The Twitter Inc. logo is displayed on a mobile device for a photograph in New York, U.S., on Monday, Sept. 16, 2013. Twitter Inc., which announced plans last week for an initial public offering, is still deciding whether to list on the New York Stock Exchange or Nasdaq Stock Market, setting off a horse race for the high-profile deal. Photographer: Scott Eells/Bloomberg via Getty Images

Twitter has become the largest media platform for minority voices on the planet. Everything from the Trayvon Martin case to the BET Awards has become the equivalent of a front-page headline on the site thanks to the social network’s trending topics, which aggregate the most popular conversations and present them to all Twitter users. Blacks over-index heavily on the site, with 29 percent of black Internet users in the U.S. reporting that they actively use Twitter in a recent Pew Research Center survey, compared to 16 percent of whites and Hispanics. In the same way Twitter owes much of its success to the early adopters who gave the site structure and the celebrities who gave it clout, it can also thank black people for helping it reach critical mass and climb to 255 million monthly active users.

So it’s disappointing that the company is so far resisting a positive trend in Silicon Valley, the disclosure of employee data related to race and gender. Chances are, Twitter’s employee roster looks a lot like its Bay Area competitors—overwhelmingly male and white. That’s not a dirty little secret in the Valley; it’s been the modus operandi for decades. The common race and gender tropes of tech startups are so ingrained that we now have an HBO sitcom to mock how far removed the tech scene is from the way the rest of the world lives.

Most tech firms have spent years resisting past entreaties to cough up demographic data. But the stonewalling ended in May, when Google published a diversity report revealing that the company is about 70 percent male, 61 percent white and 30 percent Asian. That set off a domino effect that led Yahoo, LinkedIn, Facebook and others to publish similar data. But huge consumer tech companies like Apple, Twitter and Amazon have so kept their own figures to themselves (Apple CEO Tim Cook has said the company will release its data “at some point“). Civil rights activist Jesse Jackson is planning an online petition and a social media campaign Friday to convince Twitter in particular to disclose its employee data. None of the companies mentioned responded to multiple emails from TIME asking whether they planned to release diversity reports in the future.

All of these companies, of course, are free to hire whoever they please. They work in a field so hyper-competitive that Google was once willing to give employees offered jobs by Facebook counteroffers within an hour. But anyone who’s ever held a professional job knows who you know matters as much as what you know, and many people in our so-called melting pot continue to maintain friendships exclusively within their own race. Minorities are at a natural disadvantage trying to crack into a world where no one looks like them.

Meanwhile, software development is one of the fastest-growing job sectors in the U.S., expected to grow by 23% from 2012 to 2022, according to the Bureau of Labor Statistics. Historically underrepresented minorities are showing a greater interest in the field—20 percent of the students who graduated with a degree in computer and information sciences in 2012 were black or Hispanic, up from 16 percent a decade prior (at Google, by comparison, 5 percent of workers are black or Hispanic and 4 percent are multiracial). Making a commitment to diversity now means that a wider number of people will have access to these well-paying jobs in the future, a result that will help the tech sector remain prosperous and in-tune with cultural shifts as whites continue to decline as a percentage of the overall U.S. population.

Perhaps the companies that have yet to speak up on diversity fear the negative headlines that will come from admitting that their organizations are mostly comprised of white males. But an annual diversity report is a flag in the sand that indicates inclusiveness is important to a company, important enough to stake its reputation on. Diversity in the workforce has proven benefits for business, and it’s a savvy long-term marketing tool to help recruit employees who value diversity in their work life. The public pressure that naturally stems from such transparency will also encourage tech firms to partner with organizations already looking to boost involvement by women and minorities in computer science, such as Girls Who Code, Black Girls Code and the national societies for black and Hispanic engineers.

Obviously this is not just an issue that affects Silicon Valley. My own industry has seen a declining percentage of minorities working in newsrooms, and men still outnumber women in journalism jobs nearly two-to-one. We could use some more transparency on these issues as well. All U.S. companies with more than 100 employees are required to send detailed demographic data to a federal agency called the Equal Employment Opportunity Commission each year, so there’s no reason they can’t share it publicly. The European Union passed a law in April requiring firms with more than 500 employees to publicly release data related to workforce diversity, environmental sustainability and human rights.

It shouldn’t take a government mandate to introduce transparency, though. Right now the tech giants are uniquely positioned among American businesses to take a leadership role on the issue of diversity in the workplace. Our country’s two most valuable companies, Apple and Google, reside nine miles from each other in Silicon Valley. They and their smaller competitors are constantly crowing about how their disruptive products and progressive worldviews are changing the world for the better. Well, here’s a dead-simple way to help fix the world: take that race and gender data you’re already collecting and let everyone else see it. Public scrutiny of the information will inevitably beget positive change.

TIME Tech Policy

Verizon: Buffering Problems Are Netflix’s Fault

Netflix
Bloomberg/Getty Images

The latest salvo in an ongoing PR battle between the streaming company and the ISPs

Got buffering problems? It’s all Netflix’s fault, says Verizon. The Internet Service Provider published a lengthy blog post Thursday arguing that Netflix’s mismanagement of its video streaming traffic has led to slower speeds for users. It’s the latest salvo in a months-long public relations battle over who should pay for Internet traffic.

Following users’ complaints about slow speeds, Verizon says it studied congestion across many points in its network using a test case in Los Angeles. The company looked at both the point where content is delivered into users’ homes and the interconnection points where transit providers deliver data from content companies like Netflix to consumer-facing ISPs like Verizon. For most content delivered to Verizon’s network, there was no congestion. However, Netflix content approached 100% capacity during peak utilization hours, which can lead to slower buffering speeds for end users.

According to Verizon, Netflix is to blame for this because the company didn’t reserve enough capacity, either through the transit providers or through Verizon directly, to accommodate the massive amount of video traffic it sends out on a daily basis.

“For whatever reason (perhaps to cut costs and improve its profitability), Netflix did not make arrangements to deliver this massive amount of traffic through connections that can handle it,” Verizon said in its blog post. “Netflix knew better.”

Netflix countered in a statement of its own, saying that ISPs are responsible for controlling congestion levels on their networks.

“When Verizon fails to upgrade those interconnections, consumers get a lousy experience despite paying for more than enough bandwidth to enjoy high-quality Netflix video,” a Netflix spokesman said in an email. “That’s why Netflix is calling for strong net neutrality that covers the interconnection needed for consumers to get the quality of INTER-net (sic) they pay for.”

Netflix has been advocating for months that video providers should not have to pay fees to ISPs to deliver their content efficiently (even though Netflix has in the past paid third parties such as Cogent for this service). The streaming service has tried to conflate the issue with net neutrality, arguing that such fees amount to a toll ISPs can use to prioritize certain Web-based services above others. ISPs such as Verizon and Comcast have pushed back, saying that Netflix and its customers should foot the bill for delivering its massive video traffic, not all the subscribers of a particular ISP.

For now, Netflix has agreed to pay both Verizon and Comcast fees to boost buffering speeds for customers. And the streaming service has abandoned an earlier strategy to blame Verizon directly within its app for slow streaming speeds. The Federal Communications Commission will likely be the final arbiter on who is to blame for slow buffering — the agency is currently investigating the dispute between Netflix and ISPs and may provide guidance on the issue when it drafts new regulations for net neutrality later this year.

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