Beforethe

FEDERALCOMMUNICATIONSCOMMISSION
WASHINGTON,D.C.20554

IntheMatterof

)
InquiryConcerningtheDeploymentof
)
AdvancedTelecommunicationsCapability )
toAllAmericansinaReasonableand
)
TimelyFashion,andPossibleStepsto
)
AccelerateSuchDeploymentPursuantto )
Section706oftheTelecommunications
)
Actof1996,asAmendedbythe
)
BroadbandDataImprovementAct
)

GNDocketNo.16245

CommentsofNetflix,Inc.

Netflix,Inc.(Netflix)submitsthesecommentsinresponsetotheCommissions
1

TwelfthBroadbandProgressNoticeofInquiryintheabovecaptionedproceeding.
Internettelevisionhasbecomeahighlycompetitive,diverseplatformforthedistribution
oftelevisionandmovies.Awardwinningoriginalcontentandseamlessintegrationwith
entertainmentandmobiledeviceshasledtoanincreaseinthenumberofhoursthatconsumers
2

spendwatchingInternettelevisionoverbroadbandconnections.

InquiryConcerningtheDeploymentofAdvancedTelecommunicationsCapabilitytoAll
AmericansinaReasonableandTimelyFashion,andPossibleStepstoAccelerateSuch
DeploymentPursuanttoSection706oftheTelecommunicationsActof1996,asAmendedby
theBroadbandDataImprovementAct,TwelfthBroadbandProgressNoticeofInquiry

,FCC
16100(Aug.4,2016)(NOI).
1

SeeLettertoShareholdersre:Q22016Earnings,Netflix,at2(July18,2016),
http://files.shareholder.com/downloads/NFLX/2750736377x0x900152/4D4F01674BE24DC1
ACC7759F1561CD59/Q216LettertoShareholders_FINAL_w_Tables.pdf(statingthat[a]s
InternetTVrisesinpopularity,sodotheSVODofferings.IntheUS,forexample,CBSAll
2

TheCommissionincreasedthedownloadspeedbenchmarkforfixedbroadbandservice
to25Mbpsinparttoaccountforconsumerexpectationsthattheywillbeabletoaccessvideo
overtheInternet.WatchingtelevisionshowsandmoviesontheInternetisnolongeranovelty.3
Consumersincreasinglyexpectmorefromtheirbroadbandconnection,andtheyexpectthat
broadbandInternetwilldeliveratelevisionexperiencethatisthesameorbetterthanwhatthey
receivefromtheircableservice,satelliteprovider,orlocalbroadcaster.Accordingly,Netflix
supportstheCommissionsmovetodefinemobileadvancedtelecommunicationscapabilityat
theproposed10/1MbpsthresholdandurgestheCommissiontoevaluatetheeffectsthat
broadbandcapshaveonthedeploymentofadvancedtelecommunicationscapability.
I.

TheFCCshoulddeterminewhetherAmericanhouseholdshaveaccessto
broadbandservicessufficienttoconsumeInternettelevision.

Section706requirestheCommissiontodeterminewhetheradvanced
telecommunicationscapabilityisbeingdeployedtoallAmericansinareasonableandtimely
4

fashion. AstheCommissionrecognizes,theabilityofconsumerstoaccesshighqualityvideo

Access,Seeso,AmazonPrimeVideo,Hulu,YouTubeRed,andmanyothersareallgrowing.
Ourview,however,isthatweareallgrowingprimarilyagainstlinearTVhours...).
SeeComcast,TheAdvantagesofHighSpeedInternet:WhyInvestinfasterspeed?(accessed
September5,2016),
http://www.xfinity.com/resources/theadvantagesofhighspeedinternet.html(Streaming
televisionshows,movies,slideshows,andmusicisbecomingincreasinglypopular.Morepeople
areinvestinginhighspeedInternet,andwithgoodreason.WithahighspeedInternet
connection,onecanstreammediawithoutinterruptionsandlonggonearethedaysofreloading
videosormoviesinthemiddleofwatching.)
3

47U.S.C.1302(b).
2

overtheInternetisanecessarypartoftheCommissionsinquiry. Inparticular,consumers
6

increasinglywatchtelevisionshowsandmoviesovertheInternet.
Internettelevisionhastransformedconsumersviewingexperiences.Itallowsconsumers
towatchasmuchcontentastheywant,ondemand,onanydevice,andinanylocationwhere
thereisanadequatebroadbandconnection.Onlinevideodistributors(OVDs)offeran
increasingarrayoforiginaltelevisionseriesandmovies.Servicesthatonceexclusively
distributedusergeneratedcontent,suchasYouTube,nowofferoriginal,scriptedtelevision
7

series(e.g.,YouTubeRed).Legacytelevisionnetworksnowofferonlinevideoservices and
consumersareevenabletotowatchlivesportingeventsinrealtimewiththeirInternet
8

connection. And,multichannelvideoprogrammingdistributors(MVPDs)andother
technologycompaniesarebeginningtoofferonlinetelevisionpackagesthatreplaceor
9

complimenttraditionalcableservices.

SeeNOI5.

See2016GlobalInternetPhenomenaLatinAmerica&NorthAmerica,SandvineIntelligent
BroadbandNetworks,at45(2016),
https://www.sandvine.com/downloads/general/globalinternetphenomena/2016/globalinternetp
henomenareportlatinamericaandnorthamerica.pdf(indicatingthatInternetvideoservices
representthetopfiveuniquesourcesofpeakperiod,downstream,fixedlineInternettrafficand
thatAmazonvideorosetobethethirdlargestsourceofdownstreamInternettrafficfromthe
eighthlargestsourceinjustoneyear)(SandvineReport).
6

SeeMediaBureauSeeksCommentontheStatusofCompetitioninthemarketfortheDelivery
ofVideoProgramming,PublicNotice,DA896,at11(Aug.5,2016)(statingthatbroadcast
networksareincreasinglyprovidingOVDservicesthemselves).
7

SeeNFLSundayTicket,DIRECTV,http://www.directv.com/sports/nfl(advertisingstreaming
anySundayNFLgamelive)Rio2016TheRoadtoRio,Comcast,
http://corporate.comcast.com/newsinformation/newsfeed/olympicsprimetimeliveanewway
towatchondemand2(advertisingthatthe2016SummerOlympicswouldbestreamedonline).
8

SeeAnickJesdanun,WhatyougetfromDishandSonyonlineTVchannels,AP(May11,
2016),
9

Internettelevisionisalsonolongerlimitedtothosethatwanttowatchonlaptopsand
tablets.Theintegrationofoverthetopvideocapabilitiesintosmarttelevisions,cablesettop
boxes,andstreamingdevices(e.g.,RokuTV)allowconsumerstoseamlesslyswitchbetween
linearvideoservicesandInternettelevisionservices.Forallofthesereasons,theCommissionis
righttoseeInternettelevisionatthecenterofaconsumersexpectationforwhatbroadband
connectionscandeliver.
II.

Datacapscanimpedetheuseandavailabilityofadvancedtelecommunications
capabilities.

Datacaps(especiallylowdatacaps)andusagebasedpricing(UBP)discouragea
consumersconsumptionofbroadband,andmayimpedetheabilityofsomehouseholdstowatch
Internettelevisioninamannerandamountthattheywouldlike.Forthisreason,theCommission
shouldholdthatdatacapsonfixedlinenetworksandlowdatacapsonmobilenetworksmay
unreasonablylimitInternettelevisionviewingandareinconsistentwithSection706.
Adatacaporallotmentof300GBofdatapermonthorhigherisrequiredjusttomeetthe
InternettelevisionneedsofanaverageAmerican.10Thisdoesnotaccountfortheotherthings
thatconsumerstypicallydowiththeirbroadbandconnections,suchaswebbrowsingor
downloadinggamesorappsfromtheInternet.Anaboveaveragetelevisionwatcher,a
multioccupanthousehold,oraconsumerwishingtowatchin4Krequiresamuchhighercapor

http://bigstory.ap.org/article/54dff416c0634264b32497a6c6aee8f0/whatyougetdishandsony
onlinetvchannels(detailingDISHsandSonysonlinetelevisionservices).
10

Watching3.4hoursofnetflixinHDcanuse10GBofdata.UltraHDqualitycanusenearly24

GB.See,AmericanTimeUseSurvey2015Results,NewsRelease,U.S.DepartmentofLabor
BureauofLaborStatistics(June24,2016)(indicatingthattheaverageamericanwatches3.4
hoursoftelevisioneveryday.)http://www.bls.gov/news.release/pdf/atus.pdf

allotment.Inthisway,todaysaboveaverageInternetconsumeristomorrowsaverage
Internetconsumer.
Datacapsonfixedlinenetworksdonotappeartoservealegitimatepurpose:theyarean
ineffectivenetworkmanagementtool.FixedlineBIASprovidershavestatedthatdatacapson
11

fixedlinenetworksdonotserveatrafficmanagementfunction. Theyhavebeendescribed
12

alternativelyasawaytoalignconsumersuseofthenetworkwithwhattheypay. Asamethod
ofpricediscriminationhowever,datacapsandUBPareredundanttothespeedtiersthat
consumersareusedto.DatacapsandUBPraisethecostofusingthetheconnectionsthat
consumershavepaidfor,makingitmoreexpensivetowatchInternettelevision.The
CommissionshouldrecognizethatdatacapsandUBPonfixedlinenetworksareanunnecessary
constraintonadvancedtelecommunicationscapability.
ConsumersarelesslikelytowatchInternettelevisiononamobileBIASconnectionwhen
datacapsaretoolow.MobileBIASprovidersusedatacapsinsimilarwaystothespeedtiers
commononfixednetworks:consumerspaymoreforfasterspeedsorpaymoreforhigher
datacaps.13 However,astheFCCrecentlyexplained,itwouldbecostprohibitiveformost

SeeGovernmentAccountabilityOffice,BroadbandInternet:FCCShouldTrackthe
ApplicationofFixedInternetUsageBasedPricingandHelpImproveCustomerEducation,at17
(Nov.2014),http://www.gao.gov/assets/670/667164.pdf(2014GAOReport),(Mostfixed
providerssaidthattheirnetworksdonotfacewidespreadcongestion.)ComcastsownVice
PresidentofInternetServicespreviouslyadmittedthatthedatacapwasabusinesspolic[y]not
anengineeringone.JonBrodkin,ComcastVP:300GBDataCapIsBusinessPolicy,not
TechnicalNecessity,ArsTechnica(Aug.14,2015),
http://arstechnica.com/business/2015/08/comcastvp300gbdatacapisbusinesspolicynottech
nicalnecessity/.
11

SeeOpenInternetAdvisoryCommittee,2013AnnualReport,at1415,
https://transition.fcc.gov/cgb/oiac/EconomicImpacts.pdf(OIACReport).
12

13

SeeWilliamP.Rogerson,TheEconomicsofDataCapsandFreeDataServicesinMobile

Broadband(August17,2016),

consumerstoswitchfromviewing[OTT]contentoverawirelineBIASprovidertoamobile
providerwiththesamelevelofservice(i.e.,1080p+resolution).Forexample,itwouldcostan
averageNetflixsubscriberusing[Charters]cableBIASmanyhundredsofdollarseachmonthto
14

viewthatsameNetflixprogrammingoverawirelessprovider. Thishasamaterialimpacton
Internetvideousage.ConsumerswatchedmorevideowhenTMobileeliminatedtheimpactof
datacapsonvideoviewing.15 Becauseofthis,theCommissionshouldtakeintoaccountthe
impactofdatacapsandlowdatacapsinparticularonaconsumersabilitytowatchInternet
televisionusingamobilenetwork.
Furtheringthisrestraintisthatconsumersaregenerallyuncertainandconfusedabout
whatusesofthenetworkwillcausethemtoexceedtheirdatacapordataallotment.Asthe2014
GAOReportnoted,consumersfacechallengesintrackingthedatausageofthemultiplepeople
16

andmultipledevicesintheirhousehold. DisplayofOVDcontentsubjecttoadatacapor
usagefeeinaTVchannelstylethatisvirtuallyindistinguishablefromchannelsthatarenot

http://www.ctia.org/docs/defaultsource/defaultdocumentlibrary/081716rogersonfreedatawh
itepaper.pdf(discussingtheimpactofmobileprovidersusingdatacapstopricediscriminate).

14
CharterTWCOrder56.Forexample,$50willbuy4GBfromVerizonand5GBfrom
AT&T.Atthoselevels,aconsumerwouldexhausttheir$50ofdatafromeachcarrierwell
beforetheyfinishedasingletwohourlongHDmovieandlessthanhalfwaythrougha
30minuteTVepisodeinUHD.
SeeTMobile,TMobileQuadruplesBingeOnServices,NowOver100VideoProviders
StreamDataFree(July26,2016),
https://newsroom.tmobile.com/newsandblogs/bingeon100providers.htm(statingthat80%
of[streamingvideoservices]surveyedareseeingcustomerswatchlonger,watchmore
frequentlyorwatchmoreonmobilephonesasaresultofBingeOn).
15

16

2014GAOReportat16.
6


17

subjecttoadatacapcouldleadtoadditionalconsumerconfusion. Consumerexpectationsare
thatsimilarcontentwillbesubjecttothesamerules.
III.

Discriminatoryapplicationofdatacapsareanimpedimenttoadvanced
telecommunicationscapability.

InadditiontodatacapsthatapplytoallbroadbandInternetcontent,aBIASprovider
couldalsoemploydatacapsinawaythatexplicitlydiscriminatesinfavorofonecontentsource
oranother,furtherlimitingconsumerchoice.Byimposinglimitsonlyoncertainvideoservices,
BIASproviderseffectivelyincreasethecostthatconsumersmustpaytoaccessthoseservices
whilemakingexemptcontentcomparativelycheaper,steeringconsumerstowardtheexempted
services.Theeffectisevenmoresignificantwhencombinedwithalowdatacap,andcan
materiallyimpacthowaconsumerwatchesInternettelevision.
Becauseofalowdatacap,anonlineservicemayneedtopayanISPtozerorateits
traffictoenablethatISPscustomerstoaccesstheonlineservice.Sucharrangementscreatean
incentiveforISPstomaintainartificiallylowcaps.TheCommissionshouldclarifythat
discriminatoryapplicationofdatacapsskewconsumerchoicesandworkagainst
consumerdrivenincentivestodeployadvancedtelecommunicationscapability.
IV.

Packetlossandfailuretoenterintointerconnectionagreementsareanimpediment
toadvancedtelecommunicationscapability.

TheCommissionhasdeterminedthattheexchangeoftrafficisakeycomponentofthe
openInternetitseekstoadvance.WhenBIASprovidersrepresenttotheircustomersthatthey
willbeabletoreachallorsubstantiallyallInternetendpoints,theynecessarilyalsopromiseto

TotheextentBIASprovidersdonotadequatelyandaccuratelynotifyconsumersaboutwhat
contentissubjecttodatacapsanduserfeesandwhatcontentisnot,suchdisplayfeaturesalso
raiseissuesundertheCommissionstransparencyrules.
17


18

maketheinterconnectionarrangementsnecessarytoallowsuchaccess. Without
19

interconnectionthereisnoInternetaccess.
Congestedinterconnectionpointscanimpairtheproperfunctioningofadvanced
telecommunicationscapability.Thisresultsinapoor,andsometimesnonexistent,onlinevideo
serviceevenwhenthecustomerhaspaidforahighspeedbroadbandconnection.The
CommissionshouldcontinueitspolicyofwatchfulvigilanceovertheISPinterconnection
practicesandutilizeanyandallauthorityunderTitleIIandSection706topreventsuchpractices
fromharmingthedeploymentofadvancedtelecommunicationscapability.
V.

TheCommissionshouldadoptitsproposeddownloadspeedbenchmarksof10Mbps
formobileInternet.

Thewidespreaddeploymentof3Gand4Gwirelesstechnologiesandtheimprovements
madetomobiledevicesallowconsumerstowatchInternettelevisionwherevertheyhavea
mobilebroadbandconnection.ConsumerscannowwatchInternettelevisiononabusorthe
waitingroomofadoctorsoffice.TheFCCshouldadopta10Mbpsbenchmarkformobile
broadbandbecausethatspeedrespondstoconsumerexpectationsthattheycanwatchInternet
televisionontheirmobiledevicesandwiththesewirelessconnections.
NetflixsupportstheCommissionsOpenInternetpolicywhichtreatswirelessand
fixedlineconnectionstotheInternetsimilarly.IntheOpenInternetOrder,theCommission

18

ProtectingandPromotingtheOpenInternet,ReportandOrderonRemand,Declaratory

Ruling,andOrder,30FCCRcd.5601(2015)(OpenInternetOrder)at569394204.
JointBriefforIntervenorsCogentCommunications,Inc.,COMPTEL,DISHNetwork
Corporation,FreePress,Netflix,Inc.,OpenTechnologyInstituteNewAmerica,Public
Knowledge,etal.,inSupportoftheFCC,U.S.TelecomAssnv.FCC,No.151063,2016WL
3251234at45(D.C.Cir.Jun.14,2016).
19

decidedtoapplythesamestandardtobothmobileandfixedbroadbandInternetaccessas
treatingthemdifferentlywouldriskcreatingalesserbroadbandexperienceonmobile.
...mobilebroadbandserviceshaveevolvedtobecomeessential,criticalmeansofaccess
totheInternetformillionsofconsumerseveryday.Becauseofthisevolutionandthe
widespreaduseofmobilebroadbandservices,maintainingaregimeunderwhichfewer
protectionsapplyinamobileenvironmentriskscreatingasubstantivelydifferentInternet
20
experienceformobilebroadbandusersascomparedtofixedbroadbandusers.

The10MbpsdownloadspeedproposedbytheCommissionisappropriategivenexisting
consumerexpectations.AllofthemajorInternettelevisionnetworksoffermobileapplications
sothattheircustomerscanwatcheasilyonmobiledevices.WhileNetflixrecommendsa
21

downloadspeedofatleast5MbpstoreceiveanHDqualitypicture, consumersdonotjustdo
onethingwiththeirmobiledeviceatagiventime.Applicationsinthebackgroundmaybe
syncingemail,photos,etc..A10Mbpsdownloadspeedprovidesabuffersothatconsumerscan
streamHDvideowhiletheirdevicealsousesthebroadbandconnectioninthebackground.
TheCommissionshouldstandreadytoadoptahigherbenchmarkinfuturereports.
Today,consumersarelesslikelytousetheirmobilebroadbandconnectiontostreamvideoon
multipledevicesatonce,butasconsumersincreasinglyexpectmobiletosubstituteforfixedline
connections,theCommissionscriteriainthisproceedingshouldtrackthisevolution.Additional
bandwidthwillbenecessarytosupportsimultaneousstreamingand4Kcapabilitywhen
wirelessfixedlinesubstitutabilitybecomeareality.Indeed,forsomehouseholds,mobile
broadbandisalreadytheonlywayconsumerscanaccessInternetvideo.Accordingly,the

20

OpenInternetOrderat563892.

21

SeeHelpCenterStreamingNetflixinHD,Netflix,https://help.netflix.com/en/node/13844.
9

CommissionshouldcontinueitswisepolicyoftrackingmobilefixedInternetaccesssubstitution
andreviseitsmobilespeedbenchmarkoncethatsubstitutionreachesatippingpoint.
Forthereasonsstatedabove,NetflixasksthattheCommissionconsidertheseviews
whenmakingitsjudgmentaboutwhetheradvancedtelecommunicationscapabilityisbeing
deployedtoallAmericansinareasonableandtimelymanner.

Respectfullysubmitted,

_____________________
JoshuaKorn
ChristopherLibertelli
Netflix,Inc.
1455PennsylvaniaAve.NW
Suite650
Washington,DC20004

10