Well, that didn’t last long. Netflix, Inc. (NASDAQ:NFLX) seems to have backed down from its most recent name-and-shame campaign, this time directed at Verizon Communications Inc. (NYSE:VZ) for allegedly throttling the speed of its video streaming service. As much as Netflix would like to fight for net neutrality, a series of deals and now this change of course show that it can only afford to push back against ISPs so hard.
Verizon threatened legal action within days
Less than a week ago, Netflix, Inc. (NASDAQ:NFLX) started posting a notice to customers that quality was suffering because “The Verizon network is crowded right now.” Predictably, Verizon Communications Inc. (NYSE:VZ) threatened to sue Netflix if it didn’t stop posting the message because it could hurt Verizon’s reputation in the marketplace (it’s hard to imagine that wasn’t the point), and Netflix will be taking the service down next week, though it hasn’t acknowledged that this is a reaction to Verizon’s cease and desist order.
“We started a small scale test in early May that lets consumers know, while they’re watching Netflix, that their experience is degraded due to a lack of capacity into their broadband provider’s network,” the company wrote in a blog post earlier today. “We are testing this across the U.S. wherever there is significant and persistent network congestion. This test is scheduled to end on June 16. We will evaluate rolling it out more broadly.”
At this year's Sohn Investment Conference, Dan Sundheim, the founder and CIO of D1 Capital Partners, spoke with John Collison, the co-founder of Stripe. Q1 2021 hedge fund letters, conferences and more D1 manages $20 billion. Of this, $10 billion is invested in fast-growing private businesses such as Stripe. Stripe is currently valued at around Read More
Since a sharp message blaming ISPs for slow service doesn’t seem like much of a technical feat, Netflix must have been testing how strong the reaction would be. While pulling the service down seems like Netflix, Inc. (NASDAQ:NFLX) blinked first, if they do decide on a larger rollout in the future it can only mean that the company has decided it’s willing to defend its net neutrality campaign in court.
Verizon one of Netflix slowest providers despite deal
While Netflix, Inc. (NASDAQ:NFLX) has an obvious financial interest in promoting net neutrality, it has shown that it is willing to pay ISPs to guarantee faster service, initially with Comcast Corporation (NASDAQ:CMCSA) (NASDAQ:CMCSK) and more recently with Verizon Communications Inc. (NYSE:VZ). Since that deal was signed less than two months ago, the test could also be a sign that Netflix doesn’t feel like it’s getting the connection speeds that it signed up for.
According to the latest ISP Speed Index results, Verizon Communications Inc. (NYSE:VZ) fiberoptic (FiOS) is the tenth best major US ISP for streaming Netflix, Inc. (NASDAQ:NFLX), down two spots from April to May, with an average connection speed of 1.90 Mbps and Verizon DSL is the worst with an average speed of 1.05 Mbps.