AT&T rejects Netflix call for free interconnection as unfair

NEW YORK Fri Mar 21, 2014 6:19pm EDT

An At&T logo is seen atop a store in Beverly Hills, California August 31, 2011. REUTERS/Danny Moloshok

An At&T logo is seen atop a store in Beverly Hills, California August 31, 2011.

Credit: Reuters/Danny Moloshok

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NEW YORK (Reuters) - AT&T on Friday dismissed Netflix's recent call for free interconnection as an arrogant and unfair attempt to force others to pay for the content provider to gain access to faster broadband speeds and better services.

"As we all know, there is no free lunch, and there's also no cost-free delivery of streaming movies. Someone has to pay that cost," Jim Cicconi, AT&T's senior executive vice president for external and legislative affairs wrote in a company blog post.

"Mr. Hastings' arrogant proposition is that everyone else should pay but Netflix," he said.

The post was a rebuttal to comments published by Netflix Chief Executive Reed Hastings on Thursday calling for greater protections for open Internet rules, also known as net neutrality, which require Internet service providers to give consumers equal access to all lawful content without restrictions or tiered charges.

In January a U.S. appeals court rejected federal rules that required Internet service providers to treat all web traffic equally, a decision that could allow mobile carriers and other broadband providers to charge content providers for faster access to websites and services.

In February, Netflix struck a deal to pay Comcast Corp for faster online delivery of its movies and TV shows through a practice known as interconnection, after customers complained about slow service.

Comcast is seeking approval from U.S. regulators for its proposed $45.2 billion purchase of Time Warner Cable Inc TWC.N. Treatment of internet traffic is one issue expected to receive scrutiny during the government's review.

In his original post, Hastings said internet service providers should give content companies adequate network connections for free, and singled out Comcast for supporting "weak" internet traffic rules.

Comcast responded by saying no other company had a "stronger commitment to openness of the Internet."

"While in the short term Netflix will in cases reluctantly pay large to ensure a high quality member experience, we will continue to fight for the internet the world needs and deserves," wrote Hastings.

On Friday, Hastings along with several large U.S. internet companies met with President Barack Obama to discuss changes to government surveillance programs.

Netflix did not respond immediately to requests for comment.

Hasting's argument would force service providers to pay for the increased capacity necessary to satisfy the growing demand for Netflix video streaming at the expense of AT&T's other customers, said Cicconi.

"If there's a cost of delivering Mr. Hastings's movies at the quality level he desires - and there is - then it should be borne by Netflix and recovered in the price of its service," he said.

(Additional reporting by Lisa Richwine in Los Angeles; Editing by David Gregorio)

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Comments (12)
paulflorez wrote:
“As we all know, there is no free lunch, and there’s also no cost-free delivery of streaming movies. Someone has to pay that cost”

And what exactly does Mr. Cicconi think the monthly fee I pay his company (ATT) is for??? I pay AT&T so that I can have streaming movies delivered to me.

AT&T is like the mail service, and the mail service does NOT charge the person who sends the mail and the person who receives it!

So if ATT wants to charge NetFlix, then ATT should NOT be charging me!

Mar 21, 2014 8:11pm EDT  --  Report as abuse
noirvitez wrote:
What a bunch of lies. AT&T like the other big ISPs who have little to no competition are all in collusion. There is no and has been no congestion.

Bandwidth and throughput is insanely cheap. These ISPs have leveraged themselves into no competition by bribing our elected and non-elected leaders.

Fire AT&T’s Uverse, Comcast’s xfinity TV, and Verizon’s tv service as well.

Fire all of them.

The only reasons they are charging these streaming service are:

A) most people are ignorant and believe the clogged pipes lies.
B) People are firing their cable tv providers who just so happen to be the same ISPs wanting to charge for fake “fast lanes”.

Wake up. This will destroy the internet.

Mar 21, 2014 8:45pm EDT  --  Report as abuse
AT&T is in no position to pass judgment on Netflix in this situation.

Just ask anyone with U-verse about AT&T’s questionable billing practices. I know people who saw their bills double for no reason. And an AT&T technician told me face to face that they’ve been told to bill customers for everything, even fixing problems caused by AT&T.

Companies like Comcast and AT&T all have the same business models, they all want to charge more for less (just compare Dish/DirecTV packages with similarly priced packages from Comcast and AT&T and you’ll see that Dish/DirecTV offer much more for the money), they’ll gouge anyone, even other companies. And who is hurt the most? Consumers like us.

AT&T and the other ISPs have known about companies like Netflix for a very long time, their networks should easily be able to handle the traffic, especially now, when networks can easily tap into additional network resources on demand. These companies have entire data centers they can bring online to handle high traffic volumes, not to mention the cloud resources they have access to.

Are we forced to pay to use special electrical pipelines when the local power grid is maxed out and we need to import electricity from another grid? No, because the system was designed to accommodate fluctuations in supply and demand.

AT&T and Comcast already have the capacity, too, and it’s likely already paid for, but they saw an easy opportunity to gouge a company with a popular service.

Thanks to Netflix for bringing this out in the open and kudos to them for biting the bullet and paying for the extra capacity to benefit their customers, even though they knew that what Comcast did to them was wrong.

Mar 21, 2014 8:46pm EDT  --  Report as abuse
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