I have Verizon FiOS at home. I have the 50/25 package, which means I should get roughly 5 megs a second download and 2.5 megs a second upload. I don't normally have too much need for the upload, but I do download quite a bit and I have to say for the most part I pretty much get what I pay for. When I'm downloading from someplace that has the bandwidth to support my max speeds, I usually get my max speeds or even a little faster. Any time I run a test on speedtest.net it pretty much always maxes out at what I pay for.
I also just recently re-activated my netflix account. And while I haven't experienced any issues with pauses during playback or having to wait a while before the video plays, it does take a while before it'll play at HD resolution. And sometimes it just won't play at HD at all.
Now Level3, which is the internet provider Netflix uses to connect to the internet, claims that Verizon is responsible for the slow down. They claim that verizon's network has plenty of capacity, and what it all boils down to is verizon is deliberately not increasing the connection speed between verizon and level3.
You can read about it in a blog post from level3 here: http://blog.level3.com/global-connectivity/verizons-accidental-mea-culpa/
In order for Verizon to fix that situation, all they would have to do is spend a few thousand dollars and connect a handful of wires. And for a company of Verizon's size, spending a few thousand dollars is nothing. Even further, Level3, also a large company, offered to cover the expense themselves and even connect the wires. And Verizon still has done nothing.
I decided to test this by installing a VPN (Virtual Private Network) using vyprvpn. There are other vpn services out there. But I wasn't trying to review VPN services, just determine if Verizon really is doing something to degrade netflix service.
A VPN is exactly what it says it is - a Virtual Private Network - it's a private network between myself and vyprvpn's servers. All the data between myself and the vyprvpn servers is encrypted so even though my internet connection is with Verizon, Verizon really doesn't know what I am sending back and forth between the vyprvpn servers. So with the vpn turned on, all my internet traffic flows from my Verizon connection at home, to the vpn servers, and then from the vpn servers out to the rest of the internet. Verizon has no way of knowing if I am browsing my email, watching Netflix or playing a game. All they can tell is data is going into the vpn server.
Without the VPN on, my download speeds from Netflix were very unimpressive compared to how my download speeds normally are. I wasn't even getting 1 meg a second. In fact, some of the time during playback it was so slow that it didn't even say it was buffering for HD, it just said it wasn't playing in HD at all.
The instant I turned on the VPN, suddenly my connection was fast enough that it started to buffer for HD and within a few seconds it had buffered enough that it was playing in HD. In fact the speed that i was downloading from Netflix increased by a factor of 20 or more.
So, lets recap.
When I'm not using the VPN and my data flows from me --> verizon --> level 3 --> netflix my speeds were very slow. About 0.2 megs a second.
When I am using the VPN and my data flows from me --> verizon --> vpn --> level3 --> netflix, I can play in HD within a few seconds of starting the video and my speeds went from 0.2 megs a second to anywhere from 2.0 to 6.0 megs a second. So that's 10x to 30x faster. The traffic flow that I marked in red is the traffic that Verizon doesn't know about. The only way Verizon could slow down my Netflix traffic while on the VPN would be to slowdown ALL traffic into the VPN. And I'm sure if enough people start to use this VPN service to get around Verizon's throttle of Netflix, Verizon will eventually throttle the VPN service as well.
If Verizon were not slowing down Netflix traffic, then using a VPN should actually result in worse performance since I now have a longer route to connect to Netflix. The more direct your connection is, typically the better your speed will be.
What this all comes down to is greed. We pay our ISP to connect us to the internet so we can download whatever content we're trying to access. And Verizon and the other big greedy ISP's now want Netflix to pay to send us that data. So they are literally trying to charge you coming and going. It would be like us paying FedEx to send someone a package, and then FedEx demanding the person receiving the package also pay them.