AT&T to Netflix: ‘There Is No Free Lunch’

AT&T’s chief lobbyist, Jim Cicconi, pushed back at Netflix CEO Reed Hastings’ criticism of Internet providers for seeking payments from content companies for carrying an improved signal.

“As we all know, there is no free lunch, and there’s also no cost-free delivery of streaming movies,” Cicconi wrote in a blog post on Friday. “Someone has to pay that cost. Mr. Hastings’ arrogant proposition is that everyone else should pay but Netflix. That may be a nice deal is he can get it. But it’s not how the Internet, or telecommunication for that matter, has ever worked.”

On Thursday, Hastings called for a “strong” form of net neutrality rules that would prohibit Comcast, AT&T and other Internet providers from demanding payments from content companies. His proposal was a rule that would prevent ISPs from “charging a toll for interconnection” to Netflix, YouTube or Skype, or to intermediaries like Cogent or Level 3. The latter arrange to deliver content to ISPs.

Cicconi, however, said that streaming video “is driving bandwith consumption by consumers to record levels,” with it necessary to built additional capacity to handle the traffic.

“In the current structure, the increased cost of building capacity is ultimately borne by Netflix subscribers,” he wrote. “It is a cost of doing business that gets incorporated into Netflix’s subscription rate. In Netflix’s view, that’s unfair. In its view, those additional costs, caused by Netflix’s increasing subscriber counts and service usage, should be borne by all broadband subscribers — just just those who sign up for and use Netflix service.”

Hastings wrote his blog post after Netflix agreed to a deal with Comcast last month for improved delivery of its signal to its customers, a pact he said was necessary to “protect our consumer experience.” He also chided Comcast for being an “industry leader in supporting weak net neutrality.”

For its part, Comcast noted that net neutrality rules were not designed to deal with such “peering” arrangements to deliver content to the “last mile” and to the consumer. Rather, the rules put in place by the FCC in 2010 prohibit Internet providers from blocking or degrading traffic. The Netflix-Comcast peering arrangement, Comcast’s David L. Cohen said, is an “amicable, market-based solution to our interconnection issues.”

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  1. Any time someone changes the paradigm or offers a better alternative for consumers, the broadband providers up the ante.

  2. kevin says:

    It isn’t Netflix that is consuming the bandwidth. It is me the consumer that is consuming it and it is me that is paying my ISP for it. This is all some bs just because Netflix is providing a service that’s killing cable as it is means that you (att, comcast etc.) need to stop ripping off the consumers and start competent services .

  3. Bill says:

    Bravo for AT&T.

    Data caps were originated because users sharing torrents were slowing down the network for everyone else, and services like Netflix, Hulu and YouTube are no different.

    Here’s a proposal – ISPs could direct their switches to shape traffic after 15 GB was delivered from any one site – not an issue any non-streaming user would ever notice.

  4. luvitt says:

    i swear i will cancel every AT&T serive i have if they try to screw my Netflix. I cut the cord and use Netflix only. I have notices some speed and connection problems lately, and i was wondering if they were somehow slowing my connection to netflix…wouldnt doubt it. I will erect a TOWER on my 5 acre estate and have cantennas pointing in all directions…screw at&t. and comcast. nothing but a bunch of bs on anyway. JUNK. i continuously find my self watching a damn news channel 24/7 or maybe a repeat on History channel. and I pay $200 a month for this crap? and they want to slow me down or charge my media provider more? which would be passed on to me ultimately. I will just get rid of all of it. I have 15 free local dtv channels and i could live with that. or i can just watch nothing and go work outside or spend time with the family!!!!

  5. John says:

    What is arrogant is charging me for my service and then going to a provider that I happen to subscribe to and charging them also for the same bandwidth I already pay for. The providers need to be regulated but seem to have purchased the requisite number of legislators to keep that from happening. What a travesty.

  6. Tariq Aziz says:

    The Frankenstein Monster is back, and it’s time to break it up again. AT&T should never have been allowed to grow back to the monstrosity it was and is again.

    What is arrogant is charging customers what AT&T does, and then trying to shake down customers again indirectly through the services they want to access.

  7. Netflix is right. Comcast is wrong. The more Comcast debates the deeper it sinks. Political old boy punch-back worked great in 1993. Pre Google-style internet (circa 1998) PR is sure to fail as a hornets nest of knowledgeable users are about to sting Congressmen wear it hurts, in their home district.

  8. Duke says:

    No free lunch? EXCUSE ME, but the USERS are paying AT&T for their internet services!

    Are they really saying that willing to screw over paying customers with less than quality services in the name of demanding kickbacks from Netflix?

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