For some in the industry, the death of Redbox Instant highlights a broader takeaway: Internet service providers (ISPs) have largely refrained from giving their own services preferential treatment on their networks. In a light-hearted jab at Verizon's expense Monday, AT&T policy executive Hank Hultquist said Redbox's failure is an important example of ISP restraint: Redbox Instant might have fared better had Verizon started prioritizing it over Netflix, but Verizon chose not to do so.
"If the theory that ISPs have this incentive to favor their services were true," Hultquist joked, "then Verizon is totally incompetent, because they went into this market with Redbox, and now they're totally shuttering it."
Hultquist's point, of course, is that Verizon is not incompetent — because there's either no incentive to do what net neutrality advocates fear Verizon would do or because Verizon is clearly capable of regulating itself. According to this view, there is no problem and nothing to worry about.
The question is, how much should we read into this show of restraint?
Even if Verizon had a financial incentive to prioritize Redbox Instant, the political incentives cut the wrong way. Given a choice between saving the venture or creating a massive public outcry by doing exactly the thing that net neutrality advocates are warning against, it's no surprise that Verizon chose the path of least resistance.
What's more, Verizon may not have prioritized Redbox Instant over Netflix on its network, but the ISP has signed a paid deal with Netflix similar to the one involving Netflix and Comcast. While the commercial deal is said to represent compensation for the bandwidth Netflix eats up — and although Netflix has said the payments are relatively small in size — the crucial difference here is that Netflix had to pay and Redbox didn't. That's arguably still a form of discriminatory treatment, even if Instant lacked Netflix's scale.