Retail

Netflix Admits To Throttling Videos

Your favorite guilty pleasure just admitted a dirty little secret of its own.

Last week, internet video streaming service Netflix admitted to throttling its own videos for AT&T’s and Verizon’s mobile customers but not doing the same for videos watched by Sprint and T-Mobile subscribers. According to an article by Forbes, the company has been selectively throttling its videos on these non-privileged networks for more than five years.

While many rushed to Netflix’s defense, arguing that net neutrality laws do not apply to fringe services like Netflix, others note that Netflix behavior seriously compromises competitive fairness in the mobile marketplace. How so? According to Forbes, wireless customers choose their carriers based on, among other things, service quality. With hugely popular programming, like “House of Cards” and “Orange Is the New Black,” less-than-stellar delivery of Netflix videos on your wireless device could lead you to believe a wireless carrier has weak network quality. Netflix’s deceptive practice, as Forbes points out, gives consumers who prefer high-quality mobile video a false reason to churn from AT&T or Verizon and thereby disrupts the competitive process.

And this is potentially illegal activity. As the outlet explains, the smaller carriers (Sprint and T-Mobile) would have been forced to compensate wireless customers for their network deficiency relative to the big players (AT&T and Verizon). However, by throttling the videos on the big networks, Netflix has potentially helped the smaller carriers price less aggressively, potentially leading to higher overall wireless prices for consumers.

Netflix has failed to disclose to its customers that it was, in fact, orchestrating the selective slowdown, thereby creating artificial conditions for wireless customers to choose their careers and for pricing for these networks to be regulated by the laws of supply and demand. Even the CEO of T-Mobile, at one point, cited the delivery of content on his network being superior to the bigger players, incorrectly inferring that AT&T and Verizon were to blame.

Tsk, tsk, Netflix — shame (and perhaps fines) on you.

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