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Summary:

AT&T should get paid by Netflix for making more interconnecting capacity available, argues the company’s SEVP Jim Cicconi. It’s just the latest in an increasingly public fight about peering.

The increasingly public spat on peering and net neutrality continued Friday with a blog post by AT&T Senior Executive Vice President-External and Legislative Affairs Jim Cicconi, who essentially argued that Netflix  was trying to get everyone to foot the bill for something the company should have to pay for:

“When Netflix delivered its movies by mail, the cost of delivery was included in the price their customer paid.  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.”

Yesterday, Netflix CEO Reed Hastings penned an open letter to the FCC, arguing that it should make peering a net neutrality issue and ensure that ISPs can’t ask Netflix to pay for interconnection fees to deliver content their customers have requested. Follow our ongoing coverage of these peering disputes here.

Feature image courtesy of Thinkstock/Devonyu

  1. moviepilot

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  2. Jim Cicconi’s approach to net neutrality is interesting…. Let just think where this leads…. A few examples… extra charges for:

    All commercial traffic (why should private persons subsidise commercial use?)
    All personal use (why should commercial entities subsidise private use?)
    Banking transactions (why not a cost per transaction?)
    A tariff on internet access for all homes with more than two people (they must be using more than than their reasonable share of bandwidth for one link)

    … Where does it stop?

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  3. George Preston Friday, March 21, 2014

    When Netflix delivered by mail, the postal service was not also taking 50 bucks a month from every household in subscriptions. ISPs have chosen a sales proposition that attracts people – they have made their bed, why do they feel they shouldn’t have to lie in it?

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    1. Precisely. This argument is so disingenuous. Netflix is paying for the bandwidth they consume and pricing it in as well and I am paying for my end of the bandwidth as well, so we are paying mightily for the ‘transport’ of the movie.

      Trust me, this will not end well.

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    2. You have hit the nail squarely on the head.

      Perhaps the solution is to treat ISPs like we do the USPS, a Government-held corporate entity that is not allowed to make any profit, provides free services to members of Congress (AKA “franking privileges”) and is subject to constant meddling by Congress.

      How would that do, AT&T? Nationalize all internet connectivity and make it not-for-profit.

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    3. You have simply misunderstood the ISP’s sales proposition. The notion that you can fill your inbound pipe with whatever content you choose is absurd. If you had a girlfriend living in Africa, would your ISP be obligated to fill your pipe with live video originating from her? No, she would need to pay as well, and that would get the 2 of you access to an indeterminate share of transatlantic bandwidth. If you find that share is not large enough, then one or both of you would need to make other business arrangements with the network operators, to get a bigger piece of that capacity.

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      1. tetracycloide Sunday, March 23, 2014

        Except Netflix isn’t arguing they shouldn’t have to pay for a connection. They’re arguing they shouldn’t have to pay twice, which seems more than fair. In you example it’s the indeterminate part that’s absurd. In what sense are they providing a service if they can’t tell you up front what service they’re actually offering?

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        1. Where do you come up with pay twice? Netflix was trying to argue for not pay at all, with settlement free peering. They knew it was a lot of nonsense, but a good way to deflect attention from the fact that the service they were selling was not delivering for many people.

          Comcast is providing a service in exactly the sense they spell out in the contract their customers sign. It is a best effort service. The throughput you get depends on where you are getting the data from and how much competing traffic there is on that route. Route capacity gets upgraded when one or both ends are willing to pay for it. For the most part, this is hugely advantageous. You get access to bursts of massive bandwidth across great distances, as long as you don’t plan to use it too persistently. If you want guaranteed bandwidth to a certain address, you can make a long distance telephone call.

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  4. My cable bill is $160 a month. When I try to price a better plan from the only other competitor, it costs the same. They need to tear the Comcast and ATT duopoly to pieces…

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  5. spixleatedlifeform Saturday, March 22, 2014

    As though ANY of this were not foreseen years ago when Bush, his Republican House and Senate and conservative Supreme Court refused to deem ISPs as Utilities instead of content providing and owning AND monopolizing the pipe by collusion and voluntary exclusion (mutually agreed to regional exclusivity).

    So much for the self-proclaimed free market competitive philosophy of the Ayn Randians.

    Then consider the video CODEC monopoly with its bloat code from MPEG-LA after the destruction of On2 Technologies by some mysterious Wall Street entities protected by the Authorities in charge of Wall Street itself. When there is only one CODEC owner–the MPEG-LA Syndicate–it IS a monopoly. Then consider ALL the service providers having metered service?

    THIS IS WHAT YOU GET!

    SPLF

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  6. If this kind of thinking succeeds it will only serve to slow the progress of bandwidth technology and result in US customers further falling behind other countries in customer premise bandwidth. Our lack of competition and resistance to upgrade infrastructure has turned us into one of the slower countries in the world, and arguments like this only lend more power to the companies behind bandwidth delivery to control when, where, and how much is delivered.

    This is a slippery slope and I hope it turns around soon. In the end the customer is who loses. If Netflix has to pay companies to deliver their content, you can be sure that cost will have to be passed on to the customer, and do you think our service providers will drop our monthly bills to compensate?

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    1. How do you think the Internet works? All companies pay ISP’s to deliver their content. Small ones do it through a CDN, data center or transit provider acting as intermediary. Large ones connect directly with ISP’s, which is what Netflix recently opted to do. In that case, the standard practice for 20 years has been cost free peering when traffic volumes are roughly equal in each direction. Otherwise, the network dumping data into another network pays them to deliver it, which is just common sense.

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  7. Is Henry Blodget writing the headlines for GigaOM now ??????

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