UPDATED 14:13 EDT / MARCH 19 2020

netflix POLICY

Netflix, YouTube, Amazon cut streaming bit rates in Europe as internet usage surges

Updated:

Netflix Inc. has cut traffic to customers in Europe after the European Union asked it Wednesday to downgrade high-definition video streams to standard quality in some cases, a measure officials hope will ease the strain on carrier networks facing surging internet traffic.

Thierry Breton, the EU commissioner for the bloc’s internal market, had brought up the subject in a Wednesday call with Netflix Chief Executive Officer Reed Hastings.

Update: Following talks between Breton and Hastings today, Netflix said that it would cut its bit rates across all streams in Europe to reduced traffic on its networks across the pond by 25%.

And on Friday, Amazon.com Inc. and YouTube also said they would cut their streaming quality on their services to save bandwidth strained by people forced to shelter in place watching more streaming video.

A spokesperson for Breton told TechCrunch that several potential bandwidth-saving measures had been discussed in the conversation. One proposal on the table is to have Netflix automatically convert high-definition video into standard quality during peak times when internet usage is at its highest. The EU is also calling on telecommunications providers and end-users to contribute to the reduction of network strain. 

“Streaming platforms, telecom operators and users, we all have a joint responsibility to take steps to ensure the smooth functioning of the Internet during the battle against the virus propagation,” Breton said in a statement after the discussion with Netflix’s Hastings.

Streaming platforms account for a big portion of bandwidth usage even in normal times and, among the leading players, Netflix is a particularly major source of data traffic. According to research from network equipment maker Sandvine Inc., the company generated a full 12.6% of all downstream traffic across the internet in the first half of 2019. Google’s YouTube, in turn, this month eclipsed even Netflix on the bandwidth consumption chart.

Internet usage is growing across the board as the coronavirus pandemic forces more people to work from home and schools to switch to virtual learning. Cisco Systems Inc. CEO Chuck Robbins said this week that the company’s Webex collaboration platform is experiencing record usage, while Facebook CEO Mark Zuckerberg disclosed on Wednesday that the social network’s services are facing “big surges” in activity.

But if communications tools have helped keep employees connected, the economic impact is rattling markets. The Dow Jones Industrial Average has had a volatile week so far that saw it fall sharply on Monday, recover 5.2% on Tuesday and then drop again on Wednesday. The index is at the time of writing 1.4% above its Wednesday close.

Netflix’s stock, meanwhile, is up 8.5% today, while certain other tech companies that seeing similar jumps in user activity have climbed as well. Facebook Inc. is up 7.5%, Google is trading 3.6% higher than where it was yesterday and Amazon.com Inc., which this week said it would suspend shipments of certain nonessential supplies to cope with overwhelming demand, has climbed 4.8% since the opening bell this morning.

Photo: Netflix

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