AT&T (NYSE: T) is shocked — shocked! — after Netflix admitted to lowering video resolution without customer knowledge on the mobile networks of AT&T and Verizon (NYSE: VZ).
"We're outraged to learn that Netflix is apparently throttling video for their AT&T customers without their knowledge or consent," said Jim Cicconi, AT&T's senior executive VP of external and legislative affairs, in a statement.
The American Cable Association, meanwhile, called for the FCC to investigate so-called "edge practices." "ACA is disappointed, but not surprised, that Netflix used its immunity from the FCC's Net Neutrality rules to engage in this practice," the group said in a statement. "Netflix has the ability and incentive to engage in this anti-consumer behavior notwithstanding its impact on the virtual cycle that promotes the broadband deployment sustaining Netflix's business model. In light of this revelation, ACA calls on the FCC to initiate a Notice of Inquiry into the practices of edge providers and how these companies can threaten the openness of the Internet. Under Section 706, the FCC has the authority to conduct such an inquiry and issue regulations, should it be deemed necessary."
Last week, Netflix (NASDAQ: NFLX) admitted to the Wall Street Journal that it has throttled its streams going back more than five years in order to "protect consumers from exceeding mobile data caps," which the SVOD service claimed could discourage mobile viewing in the long run. Netflix said it was throttling capped networks around the globe, including AT&T and Verizon.
Later, in a blog post, Netflix expounded on its strategy.
"We believe restrictive data caps are bad for consumers and the Internet in general, creating a dilemma for those who increasingly rely on their mobile devices for entertainment, work and more," said Netflix spokeswoman Anne Marie Squeo. "So in an effort to protect our members from overage charges when they exceed mobile data caps, our default bitrate for viewing over mobile networks has been capped globally at 600 kilobits per second. It's about striking a balance that ensures a good streaming experience while avoiding unplanned fines from mobile providers."
Netflix will reportedly roll out a mobile app update in May that will give AT&T and Verizon more control over their picture resolution.
Earlier, T-Mobile (NYSE:TMUS) CEO John Legere hinted at the Netflix strategy while plugging his company's network, which is not capped by Netflix.
"Did you know that when you watch Netflix on T-Mobile you get it at 480p?" Legere asked. "And the duopoly is actually delivering your Netflix content at 360p. I'll bet you didn't know that. Go check; it's true."
Both Verizon and AT&T flatly denied throttling video content over their networks, and AT&T went so far as to say that "our customers on 4G LTE can get much higher resolution than T-Mobile's optimized 480p limit." Netflix failed to respond to multiple inquiries from FierceWireless over the last week regarding its policies for distributing content to mobile network operators.
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