Netflix is clashing with internet service providers and subscribers hoping to binge watch “House of Cards” and “Orange is the New Black” are being force to contend with the pin-wheel of death and longer load times.
Netflix’s prime time speeds on Verizon FiOS fell 14 percent in January, according to a report in the Wall Street Journal. The reason for the delays is that Netflix refuses to pay additional fees to internet companies such as FiOS in return for carrying high-capacity streaming content.
A spokeswoman for Verizon took issue with the way the Journal depicted any issues related to routing information over various interconnected internet networks, or “peering.”
“No feud,” Linda Laughlin, a spokeswoman for Verizon, wrote in an email to TheWrap. “No standoff as characterized in the WSJ article. Nothing new here. Peering issues have been part of the Internet community and the way businesses operate for more than 15 years.”
A spokesman for Netflix did not immediately respond to requests for comment, but the issue is playing out in public at a pivotal time for the subscription streaming company and for the debate over net neutrality.
Last weekend, Netflix launched the second season of “House of Cards,” attracting a rabid audience. Netflix doesn’t release viewership numbers, but a study by traffic management firm Procera Networks estimates that 16 percent of Netflix subscribers from one internet and cable provider watched at least one episode of the series on Friday.
It also comes as the Federal Communications Commission is grappling with how to enforce net neutrality regulations that will prevent internet service providers from throttling video content or charging companies fees for faster service. Last month, a U.S. Court of Appeals for the District of Columbia overturned the Federal Communications Commission’s 2010 net neutrality regulations, saying the organization lacked the power to prevent providers from blocking content. The FCC’s chairman Tom Wheeler pledged Wednesday to create new rules.
Netflix’s stock dropped more than 2 percent last month immediately after the appeals court ruling. Investors are concerned that any additional costs for streaming will be passed on to subscribers, potentially leading to defections.
The issue of net neutrality is likely to be at the center of government deliberations over whether or not to approve Comcast’s $45.2 billion purchase of Time Warner Cable — a deal that would give the communications company control of one-third of U.S. broadband households. Comcast has agreed to honor the FCC’s net neutrality guidelines as a condition of its 2011 purchase of NBCUniversal through 2018, but Time Warner Cable is not subject to those rules.