Netflix, Inc. (NFLX) vs. Verizon Communications Inc. (VZ): Who’s At Fault?

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Netflix, Inc. (NASDAQ:NFLX) and Verizon Communications Inc. (NYSE:VZ) have been battling and alleging each other for the buffering issue that few of the Verizon subscribers face. Both companies are blaming each other rather than looking for a solution for the issue.

Netflix, Inc. (NASDAQ:NFLX), Verizon Communications Inc. (NYSE:VZ), buffering issue, ISP speed index, Is netflix a good stock to buy, is verizon a good stock to buy

The situation escalated when Colin Nederkoorn, CEO of Customer.io, wrote a blog  post after getting annoyed with buffering issues he faced with Verizon Communications Inc. (NYSE:VZ) FiOS, while watching Netflix, Inc. (NASDAQ:NFLX) videos. What he actually did, was that he used a VPN service to see if the speed improves. The speed did improve by almost 10 times from 0.375 Mbps (While on FiOS) to 3 Mbps.

Though Nederkoorn was angry with Verizon Communications Inc. (NYSE:VZ) because the speed was decent with the VPN, this test doesn’t tell us that Verizon intentionally reduced the speed. The number of users for a VPN provider would be much smaller than a giant ISP such as Verizon and hence the service quality would be better. Moreover the VPN bypasses the route and it doesn’t exactly tell us if the buffering issue was intentional.

Netflix, Inc. (NASDAQ:NFLX) released its ISP speed index  for June, where Verizon Communications Inc. (NYSE:VZ) was listed as #12 and the issue has only become worse since then. And as far as the case of Nederkoorn is concerned, a VPN actually is a more complex route as compared to direct internet connectivity as it has an overload and yet it managed to provide the speed required to buffer the video without issue. So probably Verizon Communications Inc. (NYSE:VZ) and Netflix, Inc. (NASDAQ:NFLX) need to improve the infrastructure of the pipe that connects the ISP with the video streaming provider and it might take some time looking at the current situation.

It would be interesting to see what would be the next step by both companies to resolve the issue as the users are suffering no matter whose fault it is.

Disclosure: None

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1 Comment

  1. The VPN test does prove verizon is slowing traffic. This is either intentional or due to an inadequate backbone to netflix. The path to Netflix through a vpn is no longer direct. The traffic must go to the vpn server first then that server sends the traffic on to netflix. The two routes we are comparing is therefore customer to netflix vs customer to vpn server. Both of these paths pass through the same fios equipment from customer to isp backbone. The slowing down therefore can only be from the backbone to netflix. The vpn may be using a different provider from backbone to netflix. The vpn either has a more robust connection to netflix or there is intentional tampering because a vpn hides the traffic content.

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