Netflix, you got some splainin' to do

The streaming-video service may not have violated Net neutrality rules by secretly slowing down service for certain customers, but it still owes its subscribers an explanation.

Don't mess with my "Orange Is the New Black" binge.

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Claire Reilly/CNET

Angry Netflix customers are a force to be reckoned with, and they're the ones owed an explanation about why the company would slow the transmission of video streams to some wireless customers without informing them.

Netflix found itself in the hot seat after admitting, in a Wall Street Journal story Thursday, that for five years it had been tamping down service to Verizon and AT&T customers. What's more, the Los Gatos, California, company said the policy excluded customers of T-Mobile and Sprint.

Critics immediately cried foul on Netflix, seeing hypocrisy on the part of a company that two years ago led a fight to require the Federal Communications Commission to adopt "strong" Net neutrality rules that would ban Internet service providers from slowing traffic under almost any circumstances. Netflix also wanted the FCC to require operators to be more transparent in how they manage their networks.

But the most galling aspect may be that Netflix never notified its customers that it was imposing a slowdown.

"There is nothing wrong with what Netflix is doing," said Berin Szoka, president of TechFreedom, a group that has opposed the FCC's Net neutrality regulations. "Except for not making it public."

Harold Feld of Public Knowledge, an organization that pushed hard for Net neutrality rules, agrees.

"This is not a Net neutrality issue," Feld said. "But I'm not going to defend what Netflix did here. It was really a screwup not to tell their customers about what they were doing."

Not a Net neutrality issue, but...ick

Why isn't this a Net neutrality issue? The FCC's rules, passed a year ago, prohibit slowing or blocking traffic and require that companies are open about their practices with customers. But the rules apply only to Internet service providers. The same standards are not required of Internet content companies like Netflix.

Net neutrality advocates like Feld and Matt Wood of Free Press also point out that a video company offering a service can't "throttle" itself. It's free to transmit its video at whatever quality it wishes. The concept of throttling is really meant to describe when a company like a broadband provider, which controls access to the Internet for a consumer, slows or blocks access on that connection to another service.

It could be argued that Netflix had its customers' best interests at heart. Viewing two hours of Netflix in high-definition quality could easily eat up an entire month's worth of data.

Netflix, which declined to comment beyond Thursday's blog post, said as much.

"We believe restrictive data caps are bad for consumers and the Internet in general, creating a dilemma for those who increasingly rely on their mobile devices for entertainment, work and more," Netflix's Anne Marie Squeo wrote in the blog post. "It's about striking a balance that ensures a good streaming experience while avoiding unplanned fines from mobile providers."

Netflix already lets customers adjust the settings to stream their data at a higher or lower quality, which could help them manage their data. What's more, the service automatically adjusts its stream to a higher or lower quality when the service detects network congestion. The problem lies in the fact that Netflix defaulted to a lower quality for all customers across the board on only two carriers without informing them.

"When a company does stuff for you that's supposed to be for your own good, but it doesn't tell you it's doing it, it gives you an icky feeling," Feld said.

Not off the hook yet

Netflix explained in its blog post how it slowed traffic to 600 kilobits per second to protect customers who were in danger of exceeding their mobile data caps. The company also said that in May it will introduce a new "data saver" feature for mobile apps to allow some subscribers to choose either to stream more, but lower-quality, video if they have a smaller-capacity data plan or to increase video quality if they have a less-restrictive plan. But the company offered no explanation for why it kept its practice for the past five years. When asked about this specifically, the company declined to comment.

Netflix may not have violated the FCC's rules, but that doesn't mean it's in the clear. Its failure to disclose its practice to customers could be seen as deceptive and unfair under the Federal Trade Commission's rules. While Netflix discloses a number of factors in its terms of use that explain how the quality of service might be degraded, it never mentions that one of those factors might be the company capping the speed at which it transmits the service. It also never explains that customers of some wireless companies and not others might see the quality of their service degraded.

"There's no question that Netflix has done something wrong by deceiving its customers," Feld said. "But not everything bad on the Internet is a Net neutrality violation."

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