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“Unreasonable” Data Caps Has Netflix, Inc. (NFLX) in a Tizzy

Netflix Inc (NASDAQ:NFLX)

Netflix, Inc. wants the U.S. Federal Communications Commission (FCC) to declare home Internet data caps as “unreasonable.” The online video streaming giant recently submitted a filing for the commission’s annual investigation of broadband deployment, a review mandated by Congress in Section 706 of the Telecommunications Act.

Low Data Caps and Usage Based Pricing

Generally, the FCC’s assessment focuses on availability and speed, but Netflix wants the commission to add data caps to the mix, according to a report in ARS Technica.

Netflix Inc (NASDAQ:NFLX)

The commission has powers to determine whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion and “take immediate action” where necessary.

The streaming company writes in the filling that data caps limit customers’ ability to watch online video.

“Data caps (especially low data caps) and usage based pricing (UBP) discourage a consumer’s consumption of broadband, and may impede the ability of some households to watch Internet television in a manner and amount that they would like,” according to the filing. “For this reason, the Commission should hold that data caps on fixed-­line networks ­­and low data caps on mobile networks­­ may unreasonably limit Internet television viewing and are inconsistent with Section 706.”

The company said that consumers expect broadband Internet to deliver a television experience same or better than what they receive from their cable service, satellite provider, or local broadcaster.

Netflix, Inc. is urging the commission to hold data caps on fixed line networks and low data caps on mobile networks as they may unreasonably limit Internet television viewing and are inconsistent with Section 706.

Netflix said that an average American requires a data cap of 300 GB of data per month or higher just to enjoy the Internet television. “This does not account for the other things that consumers typically do with their broadband connections, such as web browsing or downloading games or apps from the Internet,” the company writes.

“An above average television watcher, a multi occupant household, or a consumer wishing to watch in 4K requires a much higher cap or allotment,” the filling said.  “In this way, today’s ‘above average’ Internet consumer is tomorrow’s average Internet consumer.”

The streaming also said that consumers are less likely to watch Internet television on a mobile connection when data caps are too low.

The FCC should recognize that data caps and UBP on fixed line networks are an unnecessary constraint on advanced telecommunications capability, the company said.

Netflix Opposes Price Discrimination

Netflix, Inc. also criticized ISPs for imposing data caps in a discriminatory manner. ISPs could employ data caps in a way that explicitly discriminates in favor of one content source or another, further limiting consumer choice.

“Because of a low data cap, an online service may need to pay an ISP to zero rate its traffic to enable that ISP’s customers to access the online service. Such arrangements create an incentive for ISPs to maintain artificially low caps. The commission should clarify that discriminatory application of data caps skew consumer choices and work against consumer driven incentives to deploy advanced telecommunications capability,” the company said in the filing.

Moreover, the streaming company urged the commission to adopt a 10Mbps standard for mobile broadband. The company said that speed responds to consumer expectations that they can watch Internet television on their mobile devices with the deployment of 3G-4G wireless technologies and the improvements to mobile devices.

In other news, Netflix is going to release its first original Spanish film at next month in 190 countries. Also, the streaming service is helping children see fewer ads in their lives every single year.

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