Netflix, Inc. (NFLX) Favors T-Mobile’s Binge On But Supports Net Neutrality

Netflix, Inc. (NFLX) Favors T-Mobile’s Binge On But Supports Net Neutrality
NFLX Photo by Matt Perreault

Netflix CEO Reed Hastings has clearly stated that he does not have any issues with T-Mobile’s controversial Binge On service. Rather, the streaming firm is a fan of the service. Binge On allows T-Mobile customers to stream videos from services such as Netflix and HBO without counting it towards their monthly data caps.

U-turn from Netflix

In the past, Netflix has asserted that such practices distort consumer choice, but now Hastings has a different view on it altogether. The streaming firm said it is seeing more viewership from T-Mobile, and this does not come as a surprise as the company makes “unlimited video consumption possible.”

During the earnings call yesterday, Hastings said, “It’s voluntary to the customer. Every customer of T-Mobile can decide to turn it on or turn it off. They’re not charging any of the providers. It’s an open program.”

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He added that many of Netflix’s competitors such as Hulu and HBO are also in the program. Since Netflix benefits from this program, it is obvious that it is more inclined to defend the program. Hastings even hopes more programs of this kind will come into existence.

Net neutrality activists are furious about this service because it benefits selective companies that are included in Binge On, such as Netflix, over companies that aren’t, such as YouTube.

Binge On – pros and cons

T-Mobile launched Binge On in November and automatically turned the service on for all its customers to help them enjoy streaming from Netflix and others without using up their monthly cap. The service has one disadvantage: all videos have been limited to 480p, even if it’s a video that still counted toward the cap.

It is possible for customers to opt out from the service, but that can be done only via T-Mobile’s website. In December, YouTube complained, after which the EFF called on the FCC to conduct an investigation in T-Mobile’s behavior after determining that the company made use of misleading language. For example, it called its video capping ‘optimized’ instead of “throttled.”

On Tuesday, Netflix shares closed up 3.70% at $107.89. Year to date, the stock is down almost 6% while in the last one-year, it is up almost 124%.

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