• by Wendy Davis , Staff Writer @wendyndavis, June 6, 2014

A recent deal between Netflix and Verizon, which was supposed to ensure smooth delivery of online video, doesn't seem to be working out that well.

Earlier this week, the online video company cast blame for poor-quality streams on Internet service providers. Specifically, Netflix changed the message on the screen that displays while video is buffering. The message sent to Verizon users says: “The Verizon network is crowded right now. Adjusting video for smoother playback.” 

Verizon fired back with a blog post accusing Netflix of engaging in a “PR stunt,” aimed at firing up customers for political reasons. “It is sad that Netflix is willing to deliberately mislead its customers so they can be used as pawns in business negotiations and regulatory proceedings,” Verizon writes. “It would be more accurate for Netflix's message screen to say: 'The path that we have chosen to reach Verizon’s network is crowded right now.'”

That statement, however, doesn't address the contested issue at the heart of the dispute: how Verizon handles traffic from the middlemen -- companies like Level 3 and Cogent -- used by Netflix (and other video providers). Some intermediaries have gone so far as to accuse ISPs of deliberately causing congestion.

Regardless, Verizon is now escalating the dispute by threatening to sue Netflix for telling users that the slow streams are Verizon's fault. The company says that Netflix's “false accusations” can harm Verizon's brand by giving consumers the idea that all online video will stream poorly.

“Netflix has been aware for some time that a few Internet middlemen have congestion issues with some IP networks and nonetheless, Netflix has chosen to continue sending its traffic over these congested routes,” Verizon's general counsel Randal Milch writes to Netflix's in-house lawyer, David Hyman. “To now accuse last-mile ISPs of being solely responsible for service issues that may relate to congestion on peering circuits ... is self-serving, deceptive, inaccurate and an unfair business practice."