AT&T: ‘Arrogant’ Netflix Wants a Free Lunch

The telecom company fires back over a push for new federal rules.

Actor Kevin Spacey as Rep. Frank Underwood in the show House of Cards.
National Journal
Brendan Sasso
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Brendan Sasso
March 21, 2014, 2:17 p.m.

Net­flix is try­ing to shift the cost of its ser­vice on to all In­ter­net sub­scribers, AT&T claimed on Fri­day.

“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, a seni­or ex­ec­ut­ive vice pres­id­ent for AT&T, wrote in a blog post.

Cic­coni is fir­ing back over Net­flix’s blog post from Thursday in which the on­line video site called for new fed­er­al rules to en­sure it can con­nect to In­ter­net pro­viders for free.

Net­flix CEO Reed Hast­ings warned that without gov­ern­ment in­ter­ven­tion, In­ter­net pro­viders could ex­tort pay­ments out of web­sites, ul­ti­mately strangling com­pet­i­tion and growth on­line.

Last month, Net­flix agreed to pay for dir­ect ac­cess to Com­cast’s net­work. The agree­ment en­sured smooth­er movie stream­ing for Net­flix’s Com­cast sub­scribers, but it was the first time the video site had ever had to pay for such a dir­ect con­nec­tion deal.

AT&T and Ve­r­i­zon have now said they are try­ing to broker sim­il­ar agree­ments with Net­flix, which ac­counts for about 30 per­cent of all In­ter­net traffic. In his blog post, Hast­ings urged the Fed­er­al Com­mu­nic­a­tions Com­mis­sion to en­act new net-neut­ral­ity rules that bar In­ter­net pro­viders from “char­ging a toll” for in­ter­con­nec­tion deals.

“The es­sence of net neut­ral­ity is that [In­ter­net ser­vice pro­viders] such as AT&T and Com­cast don’t re­strict, in­flu­ence or oth­er­wise meddle with the choices con­sumers make,” he said.

But AT&T’s Cic­coni ar­gued that broad­band com­pan­ies have to in­vest huge sums of money to in­crease the ca­pa­city of their net­works to meet the heavy de­mand of Net­flix users.

Net­flix is es­sen­tially ask­ing for all In­ter­net cus­tom­ers to bear the cost of up­grad­ing net­works for just its users, Cic­coni ar­gued.

“Mr. Hast­ings’ ar­rog­ant pro­pos­i­tion is that every­one else should pay but Net­flix,” he wrote. “That may be a nice deal if he can get it. But it’s not how the In­ter­net, or tele­com­mu­nic­a­tion for that mat­ter, has ever worked.”

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