YouTube Is Accusing T-Mobile of Throttling Its Videos
T-Mobile Offers Binge On: YouTube Objects, FCC Investigates
T-Mobile and YouTube videos
At the end of 2015, theThe Wall Street Journal reported that Alphabet’s (GOOG) YouTube is alleging that T-Mobile (TMUS) is lowering or degrading the streaming quality of its videos. According to the report, YouTube stated that “reducing data charges can be good for users, but it doesn’t justify throttling all video services, especially without explicit user consent.” Throttling is the intentional slowing down of Internet bandwidth, reducing videos from high definition to low resolution.
Binge On, T-Mobile’s free video streaming service, includes video streaming from 24 providers, including Netflix (NFLX) and Time Warner’s (TWX) HBO Now. Binge On users can stream unlimited videos from these 24 providers for free without affecting their data plans. YouTube isn’t included in this service since YouTube didn’t meet the technical requirements when the service was launched.
According to Sandvine’s December 2015 Global Internet Phenomena Report, Netflix had a 37.1% share of the peak downstream Internet traffic in North America.
As the graph above indicates, YouTube had a 17.9% share of downstream Internet traffic, while Amazon’s (AMZN) Prime Instant Video and Hulu had shares of 3.1% and 2.6%, respectively.
T-Mobile’s defense
The allegations by YouTube are significant, since YouTube had the second-largest share of downstream Internet traffic in North America in 2015. T-Mobile stated at the Citi Global Internet, Media & Telecommunications Conference on January 6, 2016, that it’s surprised by YouTube’s allegations. It said YouTube already offers viewers the option to view videos in high definition or low resolution. T-Mobile has stated that its Binge On service offers viewers the same option across multiple video streaming service providers and not for a single website.
T-Mobile makes up 0.4% of the iShares S&P US Preferred Stock Index Fund (PFF). For an investor interested in getting exposure to the Communications Services sector, PFF holds 0.75% of that sector.
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