April 03, 2020
Netflix will reduce its European network traffic by 25 percent to manage surge
Netflix will take new actions to reduce bit rates of streams in Europe following a conversation between the European Union Commissioner Thierry Breton and CEO Reed Hastings, the company announced on Thursday.
“Netflix has decided to begin reducing bit rates across all our streams in Europe for 30 days,” a spokesperson said in a statement to The Verge. “We estimate that this will reduce Netflix traffic on European networks by around 25 percent while also ensuring a good quality service for our members.”
Netflix Blowing Up Network Infrastructure In Europe
We’ve written numerous articles talking about the true capacity of the network infrastructure particularly in that of Europe.
The cold hard reality is that even the fiber networks that are in the ground are having trouble meeting the demand for Netflix.
The question is why?
Very simply the unit economics (price) and the associated volume of usage make it very difficult for a Telco to generate the necessary margins to reinvest in their network.
The capacity in a fiber network far exceeds that of a wireless network including 5G.
We will be publishing a very interesting series of articles talking about the blowing up of both wireless and fiber networks.
Operators that adopt an unlimited approach to high speed internet (fibre) or wireless (4G and 5G) have only 1 option to meet the increased network infrastructure demand and that is to raise prices on that unlimited bundle.
A return to rational pricing is going to be critically important to meet increased CAPEX investments in legacy wireless (4G) and next generation networks (5G and Fiber).
The return will occur due to market forces and pressure on the balance sheet associated with excessive debt levels that the Telcos (Wireline/Fiber and Wireless) are carrying.
Netflix will reduce its European network traffic by 25 percent to manage surgeBack