If you've noticed a recent slowdown in your Netflix service, it isn't anything to do with Verizon, according to a J.P. Morgan analyst who says he's had conversations with the streaming video company.
The analyst, Doug Anmuth, told Re/code Tuesday that Netflix CEO Reed Hastings is confident that Internet providers won't dare to provoke the wrath of users by slowing down access to films and TV shows. More importantly, Re/code reports, Netflix itself hasn't observed anything to suggest that Verizon is throttling bandwidth.
Netflix isn't officially commenting on the issue, but the note throws cold water on a theory endorsed by some subscribers to Verizon FiOS. Last week, a Texas software engineer said some of his Internet usage, including Netflix, was being slowed to 40 kBps, despite paying for a 75 Mbps pipe.
The engineer suspected that Verizon was taking advantage of a recent court decision that made it legal for broadband providers to prioritize network traffic.
The company's denial also appears to be bolstered by Netflix's own data showing that streaming speeds on FiOS have been on the decline since October — long before the D.C. Circuit ruled against government regulations on Internet speeds.
The data help undermine the argument that Verizon is intentionally throttling traffic. Other broadband providers such as Comcast have also seen a drop in their Netflix speeds.
So if Verizon isn't acting to slow down traffic, what explains the slowdown in service?
Increased loads could be to blame. By some estimates, Netflix accounts for up to a third of North American Internet traffic at peak hours. To cope with the rising tide of demand, Netflix has been promoting OpenConnect, a technology that boosts speeds but requires Internet providers to cache some video inside their own networks. This makes it faster and cheaper for Netflix to deliver content.
Verizon and Comcast have declined to partner with OpenConnect. Netflix warns that this could result in reduced speeds. To help keep track of ISP performance, Netflix has an index that ranks Internet providers according to how well they carry streaming content. Google Fiber tops the list, while major networks fall toward the middle. Some have argued that the ranking serves two purposes: to give an account of streaming speeds, yes, but also to shame providers that haven't signed on with OpenConnect.
In the future, OpenConnect will only become more important. Netflix in September expanded access to its Super HD streams from just those ISPs that use OpenConnect to include those that do not. The resulting deluge of extra data may be one reason for the recent slowdown — and the decline in performance across more than a dozen broadband services appears consistent with that decision.
If Netflix previously limited Super HD service to a select few as a way to incentivize adoption of OpenConnect — a carrot-based approach, you could say — then opening the floodgates to bandwidth-intensive streams might be Netflix's way of pressuring ISPs to agree to OpenConnect instead — a stick-based approach. Arguing that users would revolt if the carriers' response were to throttle traffic, Netflix is in a good position now to demand concessions from Internet providers. Netflix has Verizon and Comcast boxed in.