Is Netflix Trying To Have Its Net Neutrality Cake And Eat It Too?

netflixhackgrabLast week’s vote by the FCC to approve new net neutrality rules was seen as a big win for streaming services like Netflix, as it prevents ISPs from throttling or blocking access to online content and from prioritizing any data. And indeed, Netflix has been one of the more vocal corporate cheerleaders for neutrality. But that apparently hasn’t stopped the company from making deals that calls into question Netflix’s actual stance on the issue.

When Netflix launches in Australia later this month, some broadband users won’t have to worry that their binge-watching might push them over their monthly limits. That’s because Netflix is making deals Down Under that would exempt its data from counting against data caps.

The question is whether or not this sort of “zero-rating” offering — similar to how T-Mobile doesn’t count certain streaming music services against data caps — violates the neutrality rules’ prohibition against prioritization.

It definitely offers consumers an incentive to use the data-sponsoring service rather than a competitor whose data will go against their monthly cap. At the same time, there is no actual speeding up or improving of the data involved.

There is no cut-and-dry answer in the FCC’s new rules, as they do not explicitly forbid or allow sponsored data. Under the order’s standard of conduct, the FCC can look at specific zero-rating offers to determine if they are a threat to neutrality, but there is no blanket ban against them.

And as points out, the streaming video market in Australia has a more flexible attitude toward sponsored data, with multiple media companies footing the bill for their users’ usage.

Regardless of whether or not such arrangements would violate net neutrality guidelines in the U.S., Australia, or Antarctica, Netflix leadership had previously been very clear on its position regarding this topic.

In 2012, Netflix CEO Reed Hastings accused Comcast of violating the original neutrality rules by not counting data coming through its Xfinity streaming services against data caps.

“Comcast should apply caps equally, or not at all,” he wrote at the time. “In what way is this neutral?”

And in a statement to The Verge, Netflix simultaneously acknowledges the shortcomings of sponsored data while saying it’s going to do it if the other guys do it.

“Zero rating isn’t great for consumers as it has the potential to distort consumer choice in favor of choices selected by an ISP,” reads the statement. “We’ll push back against such efforts, but we won’t put our service or our members at a disadvantage.”

As mentioned above, the door isn’t shut on sponsored data stateside. You can expect ISPs and deep-pocketed content companies to push the boundaries on these deals to see exactly what the FCC will and won’t allow.

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  1. wsuschmitt says:

    I’m not really sure if they are looking to have their cake and eat it too. In the case of Netflix, they are trying to maximize their potential using the local laws of the countries that they are in. In the case of the US, they definitely want people to stream as much as possible and only pay for the internet once. In the case of the Australian segment, they want people to stream as much as possible… just within the framework of the Australian laws and customs. FCC’s definition of Net Neutrality only affects US internet connections, not the world’s.

    Now, it’ll get interesting when licensing allows shows to be seen only in specific countries and people will be using VPN from outside of those countries to make it look like they are “authorized” and in-country and can watch.

    • webalias says:

      Actually, licensing already limits the availability of many Netflix titles to certain markets. There are lots of films available on Netflix in the U.S. that aren’t offered to Netflix customers in other countries. Likewise, there are films that Netflix streams in one or more other markets — the UK, France, Sweden, Denmark, Argentina, Brazil, or even Canada — that you can’t watch on Netflix in the U.S. Well, theoretically. You can get one of those VPN accounts for as little as three or four bucks a month (or free, with limited capabilities) that will allow you to watch content on Netflix that is not generally available here. As a bonus, you can also watch content on the BBC and other venues that you can’t otherwise access, and enjoy a bit more privacy from the prying eyes of Uncle Sam. Of course, I would never suggest that anyone try to circumvent licensing agreements. Or do anything he or she might not want the government to track in a database.