Netflix's admission that it slows down video streams warrants a federal investigation, FCC Commissioner Michael O'Rielly said today.
"It appears that Netflix made accusations of wrongdoing by ISPs, all the while knowing that its own practices were one of the causes of consumer video downgrading," O'Rielly said in a speech delivered at the American Action Forum. "There is no way to sugarcoat it: the news is deeply disturbing and justly generates calls for government -- and maybe even Congressional -- investigation."
O'Rielly was responding to Netflix's recent acknowledgment that for more than five years, it secretly slowed down videos streamed through AT&T and Verizon's networks. The online video company came clean about the throttling late Thursday, one week after T-Mobile CEO John Legere called attention to the speed reductions on rival networks.
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 revelation immediately put Netflix on the defensive with broadband providers, as well as critics of the FCC's recent net neutrality rules. Those rules -- which don't apply to Netflix and other so-called "edge providers" -- prohibit Internet service providers from blocking or degrading material.
But even though Netflix isn't subject to the rules, its admission sparked accusations of hypocrisy, given that it was among the most vocal proponents of net neutrality. In 2014, when the FCC was accepting comments on proposed rules, Netflix called for "strong" neutrality provisions that would prohibit ISPs from charing extra "interconnection" fees in exchange for direct connections between itself and their servers.
During that time, Netflix's subscribers often were experiencing choppiness in their streams. Netflix eventually resolved the problems by signing "interconnection" agreements with at least four ISPs -- Verizon, Time Warner Cable, Comcast and AT&T. While the details of those agreements have never been revealed, they appeared to involve Netflix paying ISPs extra fees in order to connect directly with their servers.
The rules passed by the FCC last year don't prevent those arrangements, but enable the FCC to intervene in disputes over interconnection.
O'Rielly is now asking aloud whether Netflix crossed the line in its efforts to persuade the agency to regulate broadband providers.
"A company cannot knowingly make misrepresentations and inaccurate statements before the Commission," he said today. "We need to closely examine filings that were made for potential violations in light of this new information. It appears that Netflix made accusations of wrongdoing by ISPs, all the while knowing that its own practices were one of the causes of consumer video downgrading."