Netflix admitted on Thursday to throttling its streaming video on AT&T and Verizon networks to protect users from exceeding their monthly data allowance.
The company told the Wall Street Journal its throttling practices have occurred for five years as it struggles with mobile streaming's toll on data caps.
"It's about striking a balance that ensures a good streaming experience while avoiding unplanned fines from mobile providers," Netflix wrote in a blog post late Thursday.
The admission comes after T-Mobile CEO John Legere accused AT&T and Verizon of throttling video for users, but it turns out it was Netflix, who said it caps streaming at 600 kilobits-per-second.
"We're outraged to learn that Netflix is apparently throttling video for their AT&T customers without their knowledge or consent," Jim Cicconi, head of legislative affairs for AT&T, said in a statement to CNET.
Netflix confirmed it's working on ways customers, who pay $10 per month to access movies and television shows, can control the video quality in hopes of saving on bandwidth. The feature is expected out in May and sounds similar to YouTube's quality picker on its videos.
Obviously a constraint on its business, Netflix says two hours of HD video can consume up to 6GB of data -- which could be an entire month's data plan at Verizon.
Netflix said it doesn't throttle video for T-Mobile and Sprint customers because "historically those two companies have had more consumer-friendly policies." T-Mobile has partnerships in place with Netflix as part of its BingeOn program, and Sprint will throttle data speeds once a customer reaches their data cap.
"This hasn't been an issue for our members," Netflix wrote. "Our research and testing indicates that many members worry about exceeding their mobile data cap, and don't need the same resolution on their mobile phone as on a large screen TV to enjoy shows and movies. However, we recognize some members may be less sensitive to data caps or subscribe to mobile data plans from carriers that don't levy penalties for exceeding caps."
Netflix has been a staunch supporter of Net Neutrality, a movement that advocates all traffic on the Internet should be treated equal. Netflix argues Internet service providers shouldn't offer fast lanes for companies to pay for faster data streaming to customers. Further, it argues providers can't block or slow down content.
"Netflix's complete lack of transparency about the practice, especially in light of its strident advocacy against treating Internet communications differentially ... is pretty stunning," Randolph May, president of free market group the Free State Foundation, told USA Today.