Net neutrality has only been law in the US for a few days and already it is creating an awkward situation for one of its biggest champions, Netflix.
The video streaming company is going live in Australia and New Zealand later this month, and as part of its promotion there, the company has struck a deal with local internet service provider, iiNet, that will allow iiNet broadband customers to use Netflix without it counting against their monthly data limits.
Technology sites like The Verge and Gigaom have come out hard against this promotion, asking yesterday whether it brings Netflix’s commitment to net neutrality, the concept that all traffic on the internet should be treated equally, into question. Under net neutrality, ISPs in the US cannot block or slow down certain websites (that, say, might compete with their own services) or charge big content companies that consume large amounts of bandwidth for fast lanes that would speed up service to end users.
Not charging people for certain services (like iiNet is doing with Netflix in Australia) is, in a sense, discriminating in favor of a certain type of traffic. The practice is known as “zero rating.” Since many wireline broadband packages offer unlimited data in the US, it mainly applies to wireless carriers in the country (for example, T-Mobile offers access to streaming music apps on a data free basis).
Some groups insist zero rating violates net neutrality but the US communications regulators haven’t made up their mind on the issue yet. Netflix CEO Reed Hastings himself criticized it last year, complaining that usage of Netflix and other apps counts against his monthly Comcast data cap, while Comcast’s own video services don’t. ”Comcast [is] no longer following net neutrality principles,” he wrote last year. “Comcast should apply caps equally, or not at all.”
Which brings us back to Netflix in Australia. Data caps are common in Australia in fixed-line broadband, as are deals such as the one Netflix struck with iiNet. In fact, Netflix’s streaming rival, Foxtel’s Presto service, will be available to customers of the biggest ISP in the country, Telstra (which owns half of Foxtel) on an unmetered basis.
For that reason, Netflix defended the iiNet deal in a statement sent to Quartz via email.
We are committed to the principles of strong net neutrality. These arrangements are common in Australia and we opted not to put our members at a disadvantage to those of rival content providers whose viewing wasn’t being counted.
In fairness, and as others have pointed out, Netflix is merely reacting to the reality of the marketplace. It’s a bit like a politician who wants to limit campaign funding from corporations, but continues to accept such donations until the law is passed to avoid losing an election.
The move is also a reminder that, so far, net neutrality is largely an American concept, not a global one.