Netflix and Verizon Take Their Bandwidth Battle Public

Netflix  (NASDAQ: NFLX  ) has been overtly public in communicating with its customers when it feels user experience is being affected by Internet service providers. So it's not shocking that the company chose to message some of its subscribers letting them know that recent slow speeds and other issues were -- in the opinion of the digital streaming service -- Verizon's  (NYSE: VZ  )  fault.

It's important to note that while it's Netflix pointing a finger at Verizon that has gotten the most media attention, the video service has been delivering similar messages about a number of ISPs. Those companies have either kept quiet or responded directly to their customers or Netflix. Verizon answered publicly, filing a cease and desist order against Netflix.

"I think they [Verizon] made things worse," said host Jason Hellmann on Business Take, the show that gives you the Foolish perspective on the most important business stories of the week.

"It's going to get ugly," panelist Daniel Kline responded.

Netflix has been forced to make deals, including one with Comcast (NASDAQ: CMCSA  ) , to ensure decent user experiences for its customers. The company has been very public that it finds distasteful the idea of paying to not have its data throttled down by ISPs. This happened because of the in-flux state of net neutrality -- the principle that all Internet traffic must be treated equally. Once the law of the land, a lawsuit earlier this year forced the Federal Communications Commission to reconsider net neutrality, and the current policy allows for pay-for-performance deals.

Net neutrality has been an issue the public has not fully understood, which has allowed the ISPs to get away with things like throttling down Netflix users in an attempt to force the content company to make a deal. That strategy might have backfired. It has essentially put a face on why net neutrality benefits people who do not own Internet service providers.

"Imagine what would happen if Netflix just turned off access to Verizon customers?" Hellmann said. "I think a wholesale shutting down or blocking a Netflix or a service just as popular on certain ISPs is really what it takes to get this to the national debate level."

Panelist Jake Mann said that Netflix is clearly courting public opinion and that Verizon is on the losing side of the debate.

"It's pretty easy to see why users are taking the side of Netflix," Mann said. "From a PR standpoint Verizon is already losing."

Do you think Netflix is right to attempt to shame ISPs into following net neutrality principles? Watch the video for the whole story then share your thoughts in the comments section below.

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  • Report this Comment On June 12, 2014, at 10:39 AM, JJ82 wrote:

    This is why we cannot hand over the internet to ISPs.

    I swear I haven't seen such Mafia like tactics since...well, the mafia was controlling everything.

    I, the customer already pay for internet access according to a SPEED. That means I should be able to receive information at that SPEED if the company/service is capable of doing so.

    Netflix already pays on their end for their servers, as well as its connection to the internet. They pay for both speed and bandwidth amounts.

    Now ISPs want to come in and "double dip", charge companies even more to be able to send at those speeds even though its already been paid for, by me.

    You don't see UPS charging Amazon "extra" for taking up more space on their trucks do you? No, because the shipping fee is already paid for, by me, the customer.

    These ISPs need to be put in their place before they cause great harm to the American economy. We will end up being the only country on the planet doing this, prices here will skyrocket and companies will leave for greener pastures elsewhere.

  • Report this Comment On June 12, 2014, at 1:40 PM, mcampbell8 wrote:

    I agree JJ, Customers pay both Netflix's and the ISPs. ISP's going back to Netflix asking for more money for speed and network utilization is double dipping and IMO wrong. And the fact that they are slowing down connections to force customers to feel the pain and force Netflix to pay more is blackmail.

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