Netflix (Nasdaq: NFLX) CEO Reed Hastings' blog post supporting stronger net neutrality and chiding broadband ISPs brought forth a response from AT&T's (NYSE: T) Jim Cicconi, senior vice president of external and legislative affairs for AT&T, who called Hastings "arrogant" for suggesting "everyone else should pay but Netflix."
The battle of the blogs began last week when Michael Mooney, general counsel - regulatory policy at Level 3 Communications (NYSE: LVLT) blogged that last-mile ISPs are playing "chicken" with the Internet by daring content providers to use their networks without paying a toll or suffer the consequences of poor service and connectivity to end users.
Cicconi cited AT&T's multibillion-dollar investment in Project VIP as an indication that the carrier is cognizant of, and hoping to meet, new broadband demand driven by streaming services. Those network upgrades, however, are being accomplished for the benefit of all AT&T subscribers.
Netflix subscribers should pay for preferred treatment, much as they did when Netflix began as a mail delivery DVD service, Cicconi added.
"When Netflix delivered its movies by mail, the cost of delivery was included in the price their customer paid," Cicconi wrote. "It would've been neither right nor legal for Netflix to demand a customer's neighbors pay the cost of delivering his movie. Yet that's effectively what Mr. Hastings is demanding here, and in a rather self-righteous fashion."
If Netflix consumes more bandwidth, Cicconi said, Netflix should pay for network improvements that will give Netflix subscribers access to Netflix content as part of a "business cost that gets incorporated into Netflix's subscription rate. And I think we can all accept the fact that business service costs are ultimately borne by consumers."
Cicconi conceded that there is, indeed, a cost to the networks if they're required to carry Netflix movies "at the quality level (Hastings) desires" but insisted that this cost be borne by those who would benefit from the improved content: Netflix subscribers.
"That's how every other form of commerce works in our country. 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 could care less about Netflix, be forced to subsidize the high costs and stresses its service places on all broadband networks," he concluded.
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