Netflix stunned the industry today with its admission that for more than five years, it has secretly slowed down videos streamed through AT&T and Verizon's networks.
The online video company acknowledged doing so late Thursday, one week after T-Mobile CEO John Legere called attention to the speed reductions on rival networks.
Netflix only slows down videos on AT&T and Verizon, and not T-Mobile or Sprint, according to The Wall Street Journal. Netflix says the reason for the distinction is that even though T-Mobile and Sprint sometimes throttle customers who exceed their data caps, those networks have not historically charged overages.
For its part, Netflix said in a blog post that it slows video streams to 600 kilobits per second because it wants "to protect our members from overage charges when they exceed mobile data caps."
That logic might make sense to Netflix, but there are some obvious problems with the company's approach.
First, the company failed to disclose its policies to customers. Netflix isn't an Internet access provider, and therefore isn't legally required to follow the net neutrality requirements -- including the mandate for transparency and the prohibition on throttling.
But that doesn't mean it's a good idea for Netflix to have omitted this type of information in its public statements for the last five years -- especially given that Netflix spent much of that time criticizing Internet service providers for policies that resulted in throttling.
Netflix's failure to disclose also is problematic because it deprives consumers of the type of information they need when choosing a wireless service plan. Verizon still allows long-time wireless users to pay for unlimited data plans, and AT&T is now selling unlimited wireless data plans to people who also purchase television packages through DirecTV or U-Verse. T-Mobile and Sprint also have unlimited data offerings.
Netflix's approach obviously might be a relevant consideration for wireless users who are considering whether to pay extra for unlimited plans.
Jim Cicconi, AT&T's chief lobbyist, said in a statement that the company was "outraged to learn that Netflix is apparently throttling video for their AT&T customers without their knowledge or consent."
TechFreedom, a libertarian think tank that opposed the net neutrality rules, slammed Netflix for its "political hypocrisy."
"Why didn’t Netflix just disclose the practice?" TechFreedom president Berin Szoka asks today in a blog post.
The group goes on to predict that Netflix "will continue its cynical effort to regulate its rivals, while remaining free from FCC regulation."