Free Netflix for Vodafone... and price hike for everyone else

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The two media giants are currently in negotiations but it's likely that new Vodafone subscribers will soon be able to get free Netflix for six or twelve months.

The deal will be a sweetener for Vodafone's 4G contracts and will only get sweeter when the price of a Netflix subscription goes up.

£5.99 Netflix no more?

In a statement to shareholders released last week, Netflix strongly suggested that the price of their service will increase for new customers in the next three months.

The letter noted that price increases have already worked well in Ireland and suggested a "one or two dollar increase, depending on the country, later this quarter."

In Ireland, prices roses by €1 a month for new subscribers but existing customers kept their price for many months after the initial hike, a clever way out of the outrage Netflix faced when they increased prices across the board a few years ago.

Unlike in Ireland, however, Netflix UK have been battling Amazon Video (previously called Lovefilm) since their 2012 launch.

The competition - a standalone Amazon Video subscription is £5.99 a month; with Prime it's equivalent to £6.58 a month - might be enough for Netflix UK to leave our prices as they are.

Even without a Netflix price increase, though, free streaming is a great offer.

Sweetening Vodafone 4G

And Vodafone could do with an extra incentive for people to sign up to their 4G deals.

Recent research found that 54% of those in a mobile contract have no intention of switching for better internet access. Another 22% won't switch to 4G because deals are too expensive.

For those that do want 4G, Vodafone aren't an obvious choice.

Recent RootMetrics research put the network dead last in terms of 4G coverage, speeds and reliability. Vodafone reacted angrily but the damage among internet aficionados has been done.

Free access to Netflix hits like Orange is the New Black and thousands of other TV series and movies is a nice incentive for signing up to faster internet, though, especially given that Vodafone are still offering their "data test drive" deal.

The test takes the guess work out of signing up for a monthly usage allowance by giving all new Vodafone customers unlimited data for the first three months of their contract and also comes in handy with Vodafone's other promotions.

Shades of Spotify and Sky Sports

Just as they are planning to do with Netflix, Vodafone already offer Sky Sports or Spotify Premium free for six months with the provider's Red 4G contracts.

The Sky Sports access includes Sky Sports 1 and 2 (or, to put it another way, over 100 live Premier League matches) as well as cricket, golf and tennis coverage. After the six months free is over it's £4.99 to sign up.

Spotify Premium is the music apps top subscription offering thousands of songs to stream with no adverts plus listen offline options and also available through Virgin Media special offers. After six months it costs £9.99 a month.

Vodafone customers can cancel these streaming subscriptions and keep their contract, though they'll be stuck with the data limit they choose after three months which, given the amount of data all three of these apps use, could be considerable.

Data-sucking streaming

In fact, Netflix and Sky use so much data that it's a little surprising to see a mobile network actively encouraging their customers to use their sites more.

Netflix in particular has a combative relationship with the big ISPs and networks it relies on to provide its customers with an uninterrupted viewing experience.

In the US, the streaming giant recently paid millions of dollars for what is essentially a prioritised connection through the country's largest broadband provider, Comcast.

Speaking to shareholders last week, however, the company said that such deals violated net neutrality and should end.

"The Internet faces a long term threat from the largest ISPs driving up profits for themselves and costs for everyone else," Netflix said.

In response, Comcast replied that Netflix's position had little to do with high-minded principles of neutrality and a lot to do with "Netflix wanting to unfairly shift its costs from its customers to all Internet customers, regardless of whether they subscribe to Netflix or not."

Streaming services cost broadband providers more to provide, a cost which must be borne by all broadband customers unless, as in the Netflix/Comcast deal, the ISP can persuade a content provider to share the burden.

Similar deals haven't been mooted here in the UK yet.

Netflix ranks UK ISPs, however, and, at least in principle, Ofcom have no problem with ISPs prioritising certain content providers.

Perhaps the next step for Vodafone will be top billing for Netflix streams.