AT&T’s Cicconi: Netflix CEO Wants A ‘Free Lunch’

Says Reed Hastings Is Making ‘Arrogant Proposition’ That All Broadband Users Should Pay The Freight For Netflix Streaming
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AT&T policy exec Jim Cicconi unloaded on Reed Hastings Friday (March 21) in a blog post arguing that Netflix’s CEO arrogantly holds the position that all broadband users, not just Netflix subs, should pay for the increasing capacity that his video streaming service requires.

Cicconi, AT&T’s SVP-external and legislative affairs, posted his comments the day after Hastings put up one of his own claiming that Netflix reluctantly agreed to a paid interconnection deal with Comcast while also calling for “stronger” network neutrality rules that factor in peering agreements. AT&T and Verizon Communications are among other major ISPs that have acknowledged that they are also talking with Netflix about forging similar interconnection deals.

Cicconi allowed that streaming video is driving up bandwidth consumption and that ISPs should build more capacity to deal with that traffic, pointing out that AT&T’s Project VIP initiative, which covers the telco's wireline and mobile broadband expansion, are taking this trend into account.

But he took issue with Hastings’ argument that AT&T should be on the hook to pay for more ports and transport capacity to handle the increasing flow of data coming from Netflix, and that Netflix should not have to apply those additional costs of doing business into its own monthly subscription rate.

“In Netflix’s view, that’s unfair,” Cicconi wrote. “In its view, those additional costs, caused by Netflix’s increasing subscriber counts and service usage, should be borne by all broadband subscribers – not just those who sign up for and use Netflix service.”

He then likened it to Netflix demanding that neighbors of consumers that use Netflix’s DVD-by-mail service also pitch in for the cost of delivering those products.

“Mr. Hastings’ arrogant proposition is that everyone else should pay but Netflix.  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,” Cicconi concluded, citing a position from other ISPs holding that paid peering deals are the norm when inbound and outbound Internet traffic gets out of balance.

Hastings, however, has taken issue with that argument, noting in his post that Netflix is met with “an uncomfortable silence” when it asks ISPs if Netflix would qualify for a settlement-free interconnection if it were to deliver a service that used equal portions of upstream and downstream capacity, an apparent threat that Netflix could consider a peer-to-peer content distribution model.

Both arguments factor in as new FCC Chairman Tom Wheeler considers restoring the mostly vacated Open Internet rules.

Cogent Communications, a transit provider and Netflix customer that has found itself in the middle of the debate, offered last week to “resolve the impasse” between itself and major ISPs by paying the capital cost of peering upgrades. AT&T, Comcast and Verizon have not yet commented on Cogent’s offer.

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