Several Verizon FiOS users have said on the company's official message board that they've noticed a drastic degradation in the video quality of Netflix in recent weeks. The first post noting the degradation appeared on June 11, 2013, when a user said the problems started weeks earlier.
For the past few weeks I am intermittently getting only 1-2 bars on the bandwidth meter for the Xbox Netflix app, which I think means it is ~1-2 Mbps. I have a 35/35 Mbps plan with FiOS, so it should be getting HD all the time (it used to until recently).
– Verizon FiOS message board user "Glugglug"
"Glugglug" was the first user to note the problems with Netflix video quality on Verizon FiOS. Verizon denied slowing down Netflix traffic in a statement provided to Mashable.
Netflix confirmed April 28 that it had reached a similar paid peering agreement with Verizon. Netflix says the agreement should "improve performance for our joint customers" in the coming months. No terms of the agreement were announced.
Verizon owns a 50% stake in Netflix rival Redbox (Coinstar owns the other half), leading to speculation that the company is intentionally letting Netflix's video quality degrade to convince consumers to switch to Redbox. When asked, Verizon only told GigaOm that "customers rate us best in class in various reports and surveys."
Netflix is among the most popular Internet applications available today, with Netflix data traffic counting for as much as 30% of all Internet traffic in the U.S. during prime time viewing hours in the evening.