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AT&T fires back, calls Netflix strong net neutrality desire 'arrogant'

updated 05:52 pm EDT, Fri March 21, 2014

Post in response to remarks made by Netflix CEO

The Netflix and large ISP peering arrangement war of words is heating up. After Netflix CEO Reed Hastings' remarks yesterday, AT&T has also penned a missive in which it claims that ISPs who follow strong net neutrality provisions -- giving relatively cost-free data to the streamers -- is nothing less than suggesting "that people who don't subscribe to Netflix should nonetheless pay for Netflix."

AT&T points out that it believes that the Netflix post "really comes down to which consumers should pay for the additional bandwidth being delivered to Netflix's customers." The post notes that "it's simply not fair for Mr. Hastings to demand that ISPs provide him with zero delivery costs -- at the high quality he demands -- for free. Nor is it fair that other Internet users, who couldn't care less about Netflix, be forced to subsidize the high costs and stresses its service places on all broadband networks."

Additionally it points out that "when Netflix delivered its movies by mail, the cost of delivery was included in the price their customer paid." AT&T believes, contrary to the net neutrality principles, that "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." The remarks overlook the fact that Netflix does, in fact, pay for bandwidth delivery through other services such as Akamai. It also didn't distinguish what it meant by calling Netflix's bandwidth "high quality" compared to the quality that customers receive on other services now.

AT&T clearly has a vested interest in forcing Netflix to pay it for enhanced bandwidth for its users. Current (weakened) net neutrality rules make no provision for the payments, which Netflix "reluctantly" shelled out after evidence surfaced of degraded streaming quality, "to ensure a high quality member experience."

"Mr. Hastings' arrogant proposition is that everyone else should pay but Netflix," concludes AT&T's post. "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," the company claimed -- in apparent contradiction to exactly how the Internet and telecommunication have worked since their foundation.



By Electronista Staff
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  1. sunman42

    Fresh-Faced Recruit

    Joined: 11-09-11

    And by golly, the last thing you'd want to do is use taxpayers' money for multi-lane highways that trucking firms could use to transport goods for businesses.... except we already have, and (pollution and congestion aside) it was a great thing for business --- including the business that built and maintain the highways.

    Big Comm is being so shortsighted and so greedy it's breathtaking. They have monopolies almost everywhere they operate (see, for example, Comcast's claim that they should not be investigated for possible monopoly concerns in absorbing Time-Warner because, heck, they don't operate in the same markets), and they aren't clever enough to build out the bandwidth and switching capacity necessary for their customers to remain happy even if everyone else on the block is streaming House of Cards? Puh-lease. One-percenters.

  1. Charles Martin

    MacNN Editor

    Joined: 08-04-01

    sunman: you socialist you. Next you'll be telling me that my taxes help pay for things like schools, libraries, police and fire protection, none of which I use anymore so why should I pay for it? :)

  1. Makosuke

    Forum Regular

    Joined: 08-06-01

    It's kind of like the part where the telecom companies (AT&T included) were told by the government to provide good broadband service to everyone in the US, so a tax was added to everyone's bill that went to a fund to help them pay for build-out, until they decided that they didn't actually want to follow through on that promise so now are asking to be let off the hook on the "providing everybody with broadband" part, while not having to return the hundreds of millions of dollars in subsidies that were intended to pay for it.

    And AT&T wonders why I tell everyone who asks to use anyone at all but their service. Oh, wait, that's just because their service sucks. The fact that they're a self-serving functional monopoly just makes it worse.

    Also: Look at any other industrialized nation in the world. They ALL have better broadband service than the US. Isn't that kind of shameful?

  1. Arty50

    Mac Elite

    Joined: 05-23-00

    AT&T's argument is utterly ridiculous. Netflix isn't magically sending a flood of data into AT&T's network. Every bit that comes into AT&T's network is data that AT&T's customers have requested. And these customers are the one's paying for the bandwidth required to serve them Netflix data. Asking Netflix to pay for this data also is double dipping and there's no if's, and's, or but's about it.

  1. mr100percent

    Forum Regular

    Joined: 12-06-99

    If AT&T got their way, they would be able to dictate terms to Netflix, and we the consumer would be stuck with outages, the same way our cable provider cuts off certain channels during negotiation disputes. Ugh, no way. Net Neutrality all the way.

  1. dgautrey

    Fresh-Faced Recruit

    Joined: 03-02-11

    Sunman, the tax payers have paid to build out the public highways as you point out but guess what truck drivers and trucking companies pay fuel taxes and road taxes for the right to use the highway and because they make a profit using the highway they pay more than a passenger car user. Netflix wants to use the highway for free and make a profit from doing so and they want to use the express way so that their subscribers get the best possible streaming. The end user pays their internet provider for the right to access the highway, meaning the network that has been provided by the network provider, at a specific rate for download and upload but all networks are build on the concept that not all users will be online at once and so the capacity of the network does not meet these requirements. Every electrical grid, natural gas and water grid is built on the concept and there are actully rules in place that state how much capacity any given network should have as compared to the number of users.So when netflix or HBO steams some really popular show and the network is swamped if I were them, meaning netflix or HBO, I would willing pay the network provider to make sure that my subscribers were happy. The ATT&T chairman is actually right in saying that all those subscribers to their network that do not watch netflix or HBO should not have to pay extra fees to get the network built out just to supply users of netflix or HBO with top notch streaming capabilities. That is one reason why cable companies can never fully complete with over the air broadcasting because once the signal is in the air, and free by the way, there is no limit to the number of subscribers who can watch at once within the signal broadcast area at full bandwidth

  1. mr100percent

    Forum Regular

    Joined: 12-06-99

    The problem is that ISPs are deliberately throttling Netflix traffic in order to extrot money from Netflix customers through Netflix itself.

    If ISPs can't handle 2-4mbps of traffic for normal Netflix streaming on a >50mbps advertised line connection , then the problem is with net nutrality and consumers not getting what they paid for.

  1. besson3c

    Clinically Insane

    Joined: 03-03-01

    Originally Posted by dgautreyView Post

    Sunman, the tax payers have paid to build out the public highways as you point out but guess what truck drivers and trucking companies pay fuel taxes and road taxes for the right to use the highway and because they make a profit using the highway they pay more than a passenger car user. Netflix wants to use the highway for free and make a profit from doing so and they want to use the express way so that their subscribers get the best possible streaming. The end user pays their internet provider for the right to access the highway, meaning the network that has been provided by the network provider, at a specific rate for download and upload but all networks are build on the concept that not all users will be online at once and so the capacity of the network does not meet these requirements. Every electrical grid, natural gas and water grid is built on the concept and there are actully rules in place that state how much capacity any given network should have as compared to the number of users.So when netflix or HBO steams some really popular show and the network is swamped if I were them, meaning netflix or HBO, I would willing pay the network provider to make sure that my subscribers were happy. The ATT&T chairman is actually right in saying that all those subscribers to their network that do not watch netflix or HBO should not have to pay extra fees to get the network built out just to supply users of netflix or HBO with top notch streaming capabilities. That is one reason why cable companies can never fully complete with over the air broadcasting because once the signal is in the air, and free by the way, there is no limit to the number of subscribers who can watch at once within the signal broadcast area at full bandwidth





    It is pretty standard to price tech products based on the notion that people are not going to be using the product 24/7. For instance, Dropbox has a free usage tier, but they don't expect everybody to use every gigabyte of space within this free usage tier. Dropbox, Comcast, and other services also have product matrixes that allow customers that want more bandwidth/performance/whatever to pay more for this extra stuff.

    Why can't AT&T just adjust their product matrix to account for the fact that Netflix has been growing in popularity? Furthermore, while there is an increasing demand for internet service, the cost of providing that service per customer constantly changes as technology improves, and the total number of AT&T customers, particularly in the mobile space, is a moving target too.

    It's kind of hard to believe that AT&T is at the end-of-their-rope in being able to provide service in a sustainable way. If the situation was really dire, they could just impose bandwidth caps on their customers within their lower usage tiers.

    Not support net neutrality just opens the door to unscrupulous behavior, disadvantages to smaller players, possible opaqueness to market manipulation, and greater complexity. We have enough of this as it is, especially from AT&T and the other cell providers.

  1. dgautrey

    Fresh-Faced Recruit

    Joined: 03-02-11

    Here are the issues as I see them, firstly Netflix is the business of streaming movies and making a profit from doing so but wants a free ride on the back of other companies building out the network capabilities to increase the available bandwidth. It costs an absolute fortune to run fiber, especially when many cities want it underground which is one of the reason why where I live we have Verizon FIOS becuase they were allowed to run it along the existing power poles. Also the issue in the USA is that as compared to other countries, for instance lets take the UK as an example it ia same size as California but has twice the population density, that there is not the population density to justify the additional outlay and so the payback for installing all that extra bandwidth takes years to payback. I do not think this is an issue on net neutrality it is more that Netflix wants a free ride

  1. Steve Wilkinson

    Fresh-Faced Recruit

    Joined: 12-19-01

    @ dgautrey -
    "Netflix wants to use the highway for free..." - I'm seriously doubting Netflix's connection to the Internet is free.
    "The ATT&T chairman is actually right in saying that all those subscribers to their network that do not watch netflix or HBO should not have to pay extra fees to get the network built out just to supply users of netflix or HBO with top notch streaming capabilities." - So, when are they going to ***DRASTICALLY*** reduce the price for those non-netflix users? Yea, I'm not going to hold my breath either! Heck, in the USA, taxpayers have already PAID these telcos over $200B in tax-breaks to deliver 45 Mbps bi-directional Internet service for around $40/month. I'm not sure about you, but I've got nothing like that and pay a heck of a lot more.

  1. Steve Wilkinson

    Fresh-Faced Recruit

    Joined: 12-19-01

    Net Neutrality is about a lot more than prices, speed, cost and Netflix, etc. It's about actually protecting things like free-speach. Once you have the end providers legally controlling the content, they can also legally decide who gets access to what. Imagine the deals, for example, some political party might cut with the telcos if only, they 'diminish' sites of their opponent. What this is really all about, is these telcos are just chomping at the bit to double-dip to increase their profits, as well as come out with their own lines of content which they control and price (or cut deals with content providers). Once that happens, it's over folks.

  1. Charles Martin

    MacNN Editor

    Joined: 08-04-01

    It should be noted that while AT&T pays for *a tiny portion* of the build-out of the Internet (and charges its customers -- all of them, even the ones who only check email -- for it), they built all of their business (their previous telephone-centric business before and their mobile phone business now) on the back of facilities and infrastructure almost *entirely* paid for by taxpayers. So for them to accuse some other company of "profiting off the Internet" is pretty rich, particularly considering that in addition to being largely dependent for their own business on taxpayers, they recently directly stole taxpayer funds earmarked for rural and remote educational Internet access.

    Yes, Netflix is a bandwidth hog across the entire Internet. That is precisely why it pays services like Akamai to build out additional bandwidth. The truth of the matter is that Comcast and AT&T et al are blackmailing and double-dipping Netflix (and soon, every other moneybags corporation -- "oh you have an iPhone? There's a surcharge on that you know ...") and trying to become gatekeepers of how much Internet you get. If it were not so, they would offer light-use customers a dramatically lower rate. They do no such thing.

  1. Stuke

    Junior Member

    Joined: 02-11-05

    Bring on Google fiber. And when Apple decides to get into the carrier game...what things change...again.

  1. Stuke

    Junior Member

    Joined: 02-11-05

    Bring on Google fiber. And when Apple decides to get into the carrier game...what things change...again. Oh, and should MacNN call someone a socialist?

  1. Mike Wuerthele

    Managing Editor

    Joined: 07-19-12

    Originally Posted by StukeView Post

    Bring on Google fiber. And when Apple decides to get into the carrier game...what things change...again. Oh, and should MacNN call someone a socialist?



    I'm pretty sure it was a tongue-in-cheek socialist claim.

  1. auto_immune

    Dedicated MacNNer

    Joined: 05-29-08

    Hopefully the FCC will eventually do something about this dishonest behavior and implement legislation similar to the common carrier communications laws, and If FCC Chair Julius Genachowski does not have the stones to do this he needs to be thrown out on his ear and replaced by someone who does! How did all these empty suit asshats get control over OUR
    infrastructure??

  1. auto_immune

    Dedicated MacNNer

    Joined: 05-29-08

    Making ISPs common carriers: just a simple “error correction” | Ars Technica

  1. pottymouth

    Forum Regular

    Joined: 11-19-03

    Originally Posted by Steve WilkinsonView Post

    @ dgautrey -
    "Netflix wants to use the highway for free..." - I'm seriously doubting Netflix's connection to the Internet is free.



    You're absolutely right, and I'm digging the highway analogy. Looking at it from this angle, is ATT simply trying to raise the rates that Netflix had previously agreed to pay to use the highway?

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