) accusation of
Verizon Communications Inc.
) clogged broadband network affecting the former's video streaming
services, it was Verizon's turn to lash out at Netflix
Verizon retaliated on an alleged error message: "The Verizon
network is crowded right now" sent across to Netflix customers
while streaming sluggish online videos.
The conflict between the two companies heated up after a
screenshot of this message was posted on
) social networking site. While both Netflix and Verizon are
engaged in a war of words, it is expected a negative propaganda on
Verizon's broadband quality would likely hurt its reputation as an
Internet provider in the U.S. in turn, potentially forcing the
company to enter a legal battle.
Reportedly, Verizon has already sent a letter with a 5
day-notice to Netflix demanding an immediate stop on accusations
related to the poor quality of video streaming, failing which
Netflix might face a lawsuit.
The company has demanded from Netflix a list of those users who
were shown the error message. Furthermore, Verizon has also asked
Netflix to provide solid evidence to validate its charges on
Verizon's poor service which supposedly caused a slow down in
However, this "cease-and-desist" letter sent out by Verizon
hardly made an impact on Netflix. Netflix's spoke person Joris
Evers blames Verizon of not entertaining any discussion, while
Netflix tries to be more transparent on this issue.
While the relation between the two companies currently stands on
a discordant note, in April this year, both had agreeably entered
into a pact to bring more fluidity in delivering online video
content. Verizon had reportedly stated to stand by the agreement in
the coming months.
Apart from Verizon, Netflix has similar network enhancement
agreements with broadband service provider,
), which was forged after experiencing issues in content delivery
to customers using Comcast's Internet services.
However, Netflix still lists Verizon's FiOS service below all
major cable companies in its ISP (internet service provider) Speed
Index, though FiOS services offer speed that matches cable modem
download speeds in many key markets.
In the context of content delivery, Verizon and Comcast both
have unanimously stated that cost of speedy Internet service should
be borne by the video delivering companies such as Netflix, in this
case. However, Netflix has a different stance on this as it asserts
that the cost should be borne by Internet companies as consumers
who are using broadband for viewing online videos are not being
catered with what they have been promised.
The latest battle between one of the largest Internet service
providers and a content delivery company highlights the complex
network arrangement in the Internet world. Given the rise of data
consumption and increasing demand for online video streaming, we
can only expect things to become worse in future if no transparency
is maintained between the carrier network and the online video
streaming company's internal network management.
We believe a proper solution to this issue can be obtained
through appropriate agreement between companies. However, a defined
structure formulated by governing bodies can help ease out such
unwanted tensions arising between network operators and content
providers as well as aid end users, who are the ultimate victims of
such constant fiasco.
Verizon currently has a Zacks Rank #3 (Hold).
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