AT&T to Netflix users: Stop mooching and pay up

The public relations battle for net neutrality, and overall control of the pipes that bring us the web as we know it, just keeps heating up. Just days after Netflix CEO Reed Hastings’ scathing rebuke of Internet service providers (ISPs), wherein the iconic and polarizing CEO took to his blogging soap box, calling out companies like Comcast, Verizon, and AT&T for threatening net neutrality, AT&T Senior Executive VP of External and Legislative Affairs, Jim Cicconi, fired back in a blog post of his own.

Calling Hastings’ position “rather radical,” Cicconi implied that it is Netflix, not the Multi-system operators (who control the majority of Internet pathways) that is being unreasonable when it comes to deciding who should pay the toll for ensuring a better future for streaming video. In fact, Cicconi painted Hastings’ arguments for net neutrality as a demand on all Internet users to fork over cash for improving Netflix’s streaming performance – a toll that Cicconi asserts should be passed on to Netflix subscribers alone.

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Cicconi paints Netflix subscribers as grabbing a free ride from non-subscribers.

It’s an interesting argument: Netflix is hogging bandwidth. Netflix customers are using more bandwidth than users who do not subscribe to the service. Therefore, Netflix users should bear the cost of any Netflix-specific improvements to infrastructure that need to be made to the Internet’s congested maze of pipelines. You want faster service for high-quality video streams? Raise your rates and build it yourself.

In his argument, Cicconi concedes that MSOs such as AT&T have a duty to “drive more fiber into their networks” to help accommodate the growing demands of a system which is increasingly centered around high quality video streaming. And, he says, AT&T must be “ready to build the ports” necessary to handle increased traffic from Netflix streaming to its own customers. That all sounds pretty reasonable.

However, it’s Cicconi’s final point that strikes a chord. “And I think we can all accept the fact that business service costs are ultimately borne by consumers.” The question, he asks, is which consumers should bear that cost, basically painting Netflix and its subscribers as grabbing a free ride from non-subscribers. He even calls Hastings “self righteous” and “arrogant” for demanding that free ride.

But there’s a fundamental problem with that argument. Users, all users, already pick up the cost of doing business, whether it’s for Netflix streams, Youtube videos, or email. They do so by paying MSOs a fee for their monthly services. A big fee.

A recent study conducted by the New America Foundation’s Open Technology Institute found that, on average, Americans are paying more money for slower internet by a wide margin in comparison to cities around the globe. We pay more, and we get less.

Further, Netflix already had a homegrown solution to its streaming speed woes in the form of its own service, called Open Connect. Open Connect uses Netflix’s own servers to handle the growing strain of streaming bandwidth, circumventing third-party services, and connecting a direct pipeline to major MSOs to create a more efficient streaming system. Unfortunately, several of the biggest players in the industry refused to get on board with Open Connect without being paid a fee. Want to take a guess about AT&T’s stance on it? You got it: show me the money.

To be sure, Netflix is not the blameless hero in this scenario.

While Cablevision and others signed up for Open Connect, securing more efficient streaming for their customers, companies like AT&T, Time Warner, Verizon, and Comcast held out for payment, basically holding Netflix subscribers hostage to slowing speeds and then blaming Netflix for the issues. Meanwhile, Netflix blamed MSOs in a he said/she said back and forth between the two sides. When the service speed issues came to a head last January, Netflix swerved first, giving in to the nation’s biggest service provider, Comcast, in an unprecedented deal that set up a fee for a direct path to Comcast’s Internet pipelines. Similar deals for Verizon and AT&T are reportedly in the works.

And perhaps most insidiously, Netflix’s streaming troubles seemed to be at their worst right after Verizon won an impactful courtroom victory that handcuffed the FCC when it came to enforcement of net neutrality.

To be sure, Netflix is not the blameless hero in this scenario, and there is likely fault on both sides for slowing speeds, as Netflix has grown by leaps and bounds in recent years. Still, with multiple accusations of purposeful attempts by MSOs to throttle Netflix streams, and a potential windfall of new cash at stake, it’s hard to swallow the argument that the highly profitable MSOs like AT&T are doing all they can, and it’s time for Netflix and their subscribers to pay up and do their part.

As the leaders of the gargantuan companies that are shaping the future of Internet TV sound off in blog land, the only way to understand what’s really happening is to read between the lines and follow the money. So far, it looks like the people who control all the pathways are in prime position to make the big decisions about who will pay for the necessities to provide our streaming future.

As AT&T recently filed a patent that allows it to virtually skirt net neutrality altogether over the wireless web, this heartfelt rebuttal by Ciconni smells a little fishy. The company says net neutrality isn’t a problem, and that it’s your turn to chip in, Netflix viewers. What do you think?