If you are one of the million of Americans who have recently had trouble getting your Netflix (NASDAQ:NFLX) to load, rest assured you’re not alone. Many Netflix subscribers have issued complaints about the impossible loading times and poor quality of their favorite TV shows and movies, and the disruption can all be attributed to an ongoing feud currently taking place between Netflix and Verizon Communications (NYSE:VZ). According to the Wall St Journal, Verizon and Netflix have long disagreed over which party should be responsible for the extra fees that result from increased user traffic, but now the conflict is really heating up, and Netflix users are the ones paying the price. The Scotts Valley, California-based company acknowledges that its average prime-time speeds dropped by 14 percent last month.
The Journal explains that Netflix is currently navigating ongoing drama with Verizon and other broadband carriers over how much Netflix streaming content they are willing to carry without being paid additional fees. The problem is that more and more consumers are now subscribing to Netflix, and as a result, the infrastructure that is behind the scenes of the Internet is getting strained, requiring that upgrades get made. But no one wants to pay. Verizon says that Netflix should be the one to do it, considering its business is the reason the upgrades are needed in the first place, but the video subscription service contends its Verizon’s responsibility because part of its deal is that the carrier supports its traffic.
Which party has the better argument? That much is still up for debate, but until the issue gets solved, most of Netflix’s traffic will flow across Internet intermediaries like low-cost carrier Cogent Communications (NASDAQ:CCOI), the Journal says. It’s not a good solution for anyone, considering users are still facing slow loading speeds, Netflix is risking a loss of subscribers, and Verizon is in the danger zone with one of its most lucrative clients, but Verizon continues to maintain that cable and telephone companies should stop delaying upgrading existing connections, while executives at those providers think Netflix’s traffic jam highlights a need for it to distribute its traffic more evenly.
The conflict between Netflix and the big U.S. providers also has bigger implications because federal regulators are starting to weigh the merge of two of the country’s largest cable providers, Comcast (NASDAQ:CMCSA) and Time Warner (NYSE:TWC), and America’s growing online-video habit along with an evident need to upgrade existing infrastructure to support that traffic will sure play a role in their decision. Netflix has been in talks with Time Warner to secure a tie-up between the two parties, and has also spoken separately with Comcast, but now that the merger idea has been breached, all negotiations have stood at a standstill, and regulators may consider how the Comcast-Time Warner consolidation will affect all the Netflix traffic.
Still, despite its issues, Netflix has tried to remain cool, calm, and collected as it navigates its dispute with Verizon and plays off its delays as only minor problems. The Journal reports that although people have come forward saying none of their Netflix shows will load, spokesperson Joris Evers has continued to say that, “Generally, our members are able to watch Netflix, albeit perhaps at a lower quality and with potentially some startup delays at the busiest times of day.”
So either Netflix is either trying to play it cool or it really doesn’t recognize just how badly its business is getting affected by the delays. If the latter, consumers are hoping that the company will fix the issues sooner rather than later, because a subscription is surely not worth the money if the problems continue. The Internet has long been built on arrangements in which big networks agree to swap each other’s traffic without charge, based on the assumption that it will all even out over time. However, the growing popularity of online services like Netflix and Amazon.com (NASDAQ:AMZN) may end up expediting some changes.