No doubt, there's a widespread issue. As for the part about licensing and encoding - I was simply tring to state the obvious that if it's a 480p 1.25Mb encode for a Movie on a certain device, then there's realy no expectation that the streaming bitrate will be much higher. No, it won't impact buffering. But if I measure that network stream, I might only see a max of 2Mb.
Likewise if my device only supports 2 channel audio, well I'm not going to get 5.1 audio.
In you're setup you certainly should get the HD with 5.1.
Netflix and FiOS haven't promised anything together. You pay Verizon - they promise 35/35. You separately pay Netflix they promise HD with 5.1 (for you're PS3). There's no agreement between Verizon and Netflix. It might be unfair to you and the other consumers, but that's how it is.
My FiOS seems to be just fine to companies which actually have agreements with Verizon.
Including Level3:
http://i.imgur.com/H7x3jsi.png
Including CenturyLink:
http://i.imgur.com/iENOIjp.png
Once again, Verizon isn't being evil here or anything. Just like if I tried to download something from you're FiOS 35/35 connection. I will ONLY get a Max of 35 download even though I'm on the 75/35 package. Verizon can't control whether you want to pay for something more like the 150/65. That's up to you. Verizon isn't just going to give you a free upgrade so that I can download 75Mb from you're server. Verizon isn't going to give away free services for things which it normally charges for.
Google gigabit is not a large ISP. They are not a Network Service provider or a backbone provider or a Tier 1. Google is a Customer of companies like Level3 and Verizon.
traceroute to www.google.com (173.194.115.113), 30 hops max, 40 byte packets 1 L100.TAMPFL-VFTTP-135.verizon-gni.net (96.254.188.1) 1.377 ms 1.118 ms 3.265 ms 2 G0-9-2-4.TAMPFL-LCR-22.verizon-gni.net (130.81.140.62) 4.481 ms 4.901 ms 4.100 ms 3 ae2-0.TPA01-BB-RTR2.verizon-gni.net (130.81.199.82) 7.699 ms 31.255 ms 72.756 ms 4 0.ae4.XL2.MIA19.ALTER.NET (152.63.8.117) 10.548 ms 10.831 ms 9.965 ms 5 0.xe-9-1-1.GW1.MIA19.ALTER.NET (152.63.84.218) 10.254 ms 10.413 ms 10.086 ms 6 google-gw.customer.alter.net (63.65.188.38) 10.007 ms 11.720 ms *
google-gw.customer.alter.net <-- Alter.net is Verizon.
So OpenConnect makes sense for Google. They can save money. CUT COSTS to Level3 and CUT COSTS to Verizon by doing the free OpenConnect Appliance and OpenConnect Peering.
There's no technical reason why Verizon isn't on the OpenConnect. Once again, have you also complained to Netflix?
As for DNS changs and VPN.
Using a VPN takes your traffic away from the shortest path by distance, but may be faster in cases when the path would otherwise be congested. Networks generally aren't intelligent enough to automatically route around congestion.
Okay, you do some manual rerouting. Doesn't necessarily prove or disprove anything other than this other route perfoms better right now.
Arstechnica has some info here:
http://arstechnica.com/information-technology/2013/07/why-youtube-buffers-the-secret-deals-that-make-and-break-online-video/
It's can be difficult to really pinpoint a reason.