AT&T Exec Calls Netflix "Arrogant" For Expecting Net Neutrality

jayp00001 (267507) writes "'As we all know, there is no free lunch, and there’s also no cost-free delivery of streaming movies. Someone has to pay that cost. 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,' writes AT&T Senior Executive Vice President of Legislative Affairs, James Cicconi. Mr. Cicconi took issue with a blog post from Netflix CEO Reed Hastings on the importance of net neutrality.

Comments

It's not arrogant, it's correct.

[BronsCon]

Your customers pay you, as their provider, Netflix pays their provider, and it's between you and their provider to determine who, if anyone, pays who, based on the flow of traffic.

Re:It's not arrogant, it's correct.

[Qwerpafw]

Put another way:

* Netflix pays for their bandwidth
* Customers pay for their bandwidth

And yet, AT&T wants more money because they think they have the right to charge Netflix more to pass through their tollbooth.

People aren't paying for "Internet except for Netflix" and Netflix isn't paying their bandwidth costs for "Internet except for consumers."

AT&T, and other providers, should have no right to put up walls. If there are issues of peering, those should be working out at the peering level, and not at the application/service or individual business level.

The news about Apple being willing to pay for AppleTV to have a "special line" to consumers is particularly worrisome and strikes the core of the problems with anti-net neutrality positions: they create unfair markets with barriers to competition. Netflix may complain, but they can (and do! with Comcast) pay if they have to. Apple can afford to pay the gatekeepers as well.

But some new startup (Aereo, for example) or small business? They can't and won't be able to pay those gatekeeper tolls to reach consumers. And they'll be prevented from competing or disrupting.

Big business will thrive in an anti-net neutrality world. Honestly, it might even help Netflix in the long run as barriers to any competing service will be high. But it's anticompetitive and small businesses and startups alike will be prevented from innovating, and maybe even be driven out of the market by an inability to pay these tolls.

Re:It's not arrogant, it's correct.

[udachny]

And yet, AT&T wants more money because they think they have the right to charge Netflix more to pass through their tollbooth.

- it's not their 'tollbooth', it's their road. On a road you can charge different rates for different types of vehicles, this is the same situation. An eighteen wheeler can cause more damage to the road that requires more maintenance than a motorcycle, this is the same thing: a movie that needs to be streamed a million times takes up much more capacity and energy and basically uses the system much more than millions of small individual requests do.

See, I even used an appropriate car analogy.

Re: It's not arrogant, it's correct.

[Anonymous Coward]

time to take away their roads.

Re:It's not arrogant, it's correct.

[ZombieBraintrust]

No it is like phone calls. The person who initiates the call pays. They pay because they are the one who is creating congestion. Netflix is not generating any traffic. AT&T customers generate the traffic when they open thier browsers and start downloading movies. It is not Netflix desision that AT&T charges all its customers the same thing. Netflix should not be punished because AT&T promises high speed connections with unlimited access. That is AT&T's fault.

Re:It's not arrogant, it's correct.

[Anonymous Coward]

a movie that needs to be streamed a million times takes up much more capacity and energy

No it doesn't. 10 GB of traffic uses up exactly the same capacity each time it's streamed regardless of whether it's a movie or cat pictures.

If you charge more for heavy trucks you have to charge all trucks.
You can't just charge wall-mart trucks double because you don't like them.

Re:It's not arrogant, it's correct.

[bluefoxlucid]

But they're only shipping packets. It's more like NetFlix is driving eighteen million motorcycles and doesn't want to be charged five times as much per motorcycle; in fact, they should pay less due to bulk rate discount.

Re:It's not arrogant, it's correct.

[Anonymous Coward]

Okay, so should the road owner (AT&T/Comcast) be charging the owner of the eighteen-wheelers that come onto their roads (Level 3, etc.), or the company whose freight is contained within those trucks (Netflix)?

Netflix pay Level 3 to deliver the freight. Level 3 pay AT&T to use their roads. Netflix only use AT&T's roads through Level 3's service, so why should Netflix have to pay AT&T directly?

Re:It's not arrogant, it's correct.

[Burdell]

Netflix pays for their bandwidth

Well, but they don't always, at least not as much as anybody else. Several times in recent years, Netflix has switched bandwidth providers to "wanna-be tier 1" networks; that is, networks that are not as well-connected as they'd like to be because they don't really meet anybody's requirements for settlement-free peering. These providers see Netflix as leverage against their bigger competitors and appear to have sold Netflix bandwidth at well market prices in order to strong-arm competitors to provide new network interconnects.

Large networks don't just peer with anybody. There are costs involved in each additional turn-up, both for hardware ports and for the management side. They also don't just peer at a single or few locations (since that can allow outsider actors to cause drastic changes in internal network bandwidth utilization); they require other large networks to peer in a bunch of different places. Some of the smaller networks can't afford to do that, and want to dump large traffic hogs like Netflix at already congested peering points, and then complain that the big guys didn't bend over backwards to help them.

I've worked for small to very-small ISPs for over 18 years, and I definately don't hold Netflix blameless in this. They do things they know will impact their customers and then blame the other networks for all problems (and they aren't the only one, just one of the biggest in recent years).

Re:It's not arrogant, it's correct.

[Monoman]

AT&T can't meet their customer's demand so they are charging the other end (Netflix) for being too popular. Yeah that sounds about right.

Re:It's not arrogant, it's correct.

[nine-times]

Or more to the point: You can't just charge Walmart trucks because you own Target, and you want to use your ownership of the road as leverage against your competitors.

That's the real issue.

Re:It's not arrogant, it's correct.

[GameMaster]

AT&T can't meet their customer's demands while making the dramatically increased profits that they desire. There, fixed that for him.

Re:It's not arrogant, it's correct.

[JMJimmy]

And game traffic which is even more time sensitive is somehow different?

The fact is that Netflix drives demand for AT&T's services - especially the higher capacity ones. They're bitching about having to invest in more capacity even though they're able to oversell what capacity they do build. Someone has to pay for this investment, that is true, and it's the customers who are paying $65/mo for 45Mbps connections and the $10/50GB beyond the cap. Interesting fact though, according to AT&T themselves:

"In fact, less than 2% of AT&T High Speed Internet users utilize more than 150GB per month." - AT&T Broadband FAQ

So, if the vast majority of users are using less than 150GB/month that means, on average, it's less than 5GB/day of traffic - by their own advertising that means that they are serving 98% of their customers at full capacity for 16 to 232 minutes a day (16mins@45Mbps, 232mins@3Mbps).

Re:It's not arrogant, it's correct.

[jxander]

The very existence of Netflix has revealed the truth of the Emperor's new Clothes : ISPs have been promising bandwidth MASSIVELY above their actual capacity. Now that ISPs are feeling the pinch of customers demanding what was promised to them, they're lashing out at the perceived cause of this pain

It would be as though a city metro system sold million and millions of tickets MORE than what they could actually handle, but it was never a big deal because no one really used the metro all that often. But when a reason to use the metro comes up, the whole system is clogged, not functioning properly and basically ceases to function at all. Would you expect the Metro to take the blame? "Yep, our fault, we'll fix it" ... or blame whatever sparked sudden interest. Even if that impetus, whatever it was, only existed to aggravate the metro's over-sold lines, the metro is still ultimately at fault for overselling.

ISPs have been massively overselling their lines for years. Making billions of dollars on the promise of speed and throughput that they KNEW was nonexistent and completely untenable if anyone actually tried to use it. And now people are using it. So who do you blame: Netflix for being popular? Or the ISPs for selling you empty promises and lies, with full knowledge.

WE pay

[btpier]

Doesn't my monthly ISP bill pay for that delivery already?

So what am I paying for?

[asmkm22]

What exactly does my cable bill give me then, if not access to services on the web?

Re:So what am I paying for?

[geek]

What exactly does my cable bill give me then, if not access to services on the web?

I'll give you a simple example of what the Telcos want this to be like:

My wife and I went to a new wine tasting place here in town. They touted the fact they have more wine tasting machines than anywhere else in the world. You walk up to it, insert your payment and choose the oz you want and the type and you get it in a little tasting cup. Sounds simple right? It should be except that you can't use your debit or credit card and the machines don't take cash. You have to purchase a card from them to use the machines. Just the card, you have to then put money on the card after you've purchased it.

AT&T want you to think of the connection they give you as that card. They then want to charge you per site or service beyond that. You pay for the priviledge of being their customer. It's the same racket gym's have been doing for decades with their "initiation" fees they claim they need to process your paperwork and somehow cost 100$+.

Want to be their customer? You have to pay for it. Then you get to pay for it some more.

I'm already paying AT&T to deliver Netflix

[kaplong!]

I'm already paying AT&T to deliver Netflix. Seems to me the carriers expect to be paid twice for the same service, once by the source (Netflix) and once by the destination (me).

Nonsense

[fredprado]

The user already pays for it, both to AT&T and Netflix.

Well, *someone* here sound arrogant, anyway...

[pla]

there is no free lunch, and there’s also no cost-free delivery of streaming movies. Someone has to pay that cost.

So the $80 a month I pay my ISP goes to what exactly? Oh, riiight... All those rural infrastructure improvements you've fought tooth and nail against. Got it.

Guess what, Jimmy? Without the likes of Netflix, we have no use for your "internet" that goes nowhere. Perhaps you could go read up on this idea on your Compuserve account.

Classify 'em as Common Carriers under Title II

[QuietLagoon]

Cogent: Reclassify ISPs As Common Carriers Under Title II

In a bit of a clever public relations dance, Cogent has issued a press release stating that while the company refuses to pay companies like AT&T, Verizon and Comcast new peering tolls, they will pay the costs incurred by those companies to ensure there's adequate capacity at interconnection points. Cogent has been at the heart of more than a few debates over settlement-free peering, usually when the levels of traffic exchanged aren't equal. ...

Here we go...

[MrSome]

His comment shows exactly where these ISPs want to take the internet.

It's not about paying for an internet connection so you can get what you want... no no.

They want you to pay for an internet connection to get what they want to give you.

Fed Ex and Amazon

[gurps_npc]

Using the same logic, Fed Ex is slowing down my Amazon purchases over $25, because while Amazon pays for the shipping, I have refused to tip them.

Oh wait, no they are not, because Fed Ex is not run by greedy idiots trying to charge twice for one service.

More Corporate Greedmeisters

[sdinfoserv]

As an American, I really get tired of billionaires arguing with millionaires about money.... All that happens is I get screwed.
- the US has fallen from 16th in 2012 to 31st in 2014 for broadband speed...
- pro sports tickets are almost unaffordable to the average person
- US healthcare is the most expensive per capita in the developed world and is ranked 33 for infant mortality

We need to get of this 'we;re great, capitalism solves everything' fox news mantra and look at what's actually happening.
Otherwise, at some point, there's going to be just 2 jobs left in the US. The guy who owns everything and they guy who cleans his toilet.

AT&T - Fed wants their money back...

[Anonymous Coward]

Guess what AT&T, the Feds want their money back - you know, the millions they paid out for you to improve your infrastructure, those same millions that you gave your execs as bonuses while doing nothing to improve your infrastructure.

Yeah, those millions. While we're at it, they're going to revoke your licenses to be in the communications business, that includes cable, internet, cellular and phone service nationwide.. Why you ask? Well, it's due to your own arrogance and incompetence. You pissed away resources to improve your status, doubled and tripled the cost for communications and now have the temerity to ask content providers to pay you to deliver data that they've already paid to have delivered, that your customers have already paid you to deliver...

Sorry Charlie, but you can't do that. That's extortion and blackmail, that puts you (along with Comcast, Verizon, Time-Warner) up for Rico Act violations, please enjoy your time in prison and your loss of all infrastructure, patents and copyrights, you'll have nothing left.

The good of the people will prevail.

Who's not paying enough?

[wangmaster]

I'm somewhat sympathetic to the ISPs issues.
1) Internet connectivity at the end user level is oversold. AT&T (comcast, timewarner, google fiber, [insert your ISP here]) does not charge in such a way that every single user can have 100% unfettered access to your bandwidth all simultaneously. It's just the way it works
2) Netflix may pay their ISP for their bandwidth usage.

Here's the disconnect. Netflix's ISP and [insert your consumer ISP here] do not share the same network. Thus at some point, the two ISPs have to cross some barrier. Now if all of [insert your consumer ISP here]'s customers are simultaneously connecting to Netflix at the exact same time for primetime hours, who's responsibility is it to ensure that the peering arrangement is fair? Does the consumer ISP need to pay to make sure that the peering relationship is such that all their users have the ability to stream from Netflix unfettered? Considering 1) above, is this fair to the ISP? They could do so, but to maintain their existing cost structure it'd likely mean that they may have a smaller pipe to another peer. Is it fair to users using those other peers or do they also have simply make sure ALL of their peers are able to fully pass 100% of traffic unfettered at peak times?

The simple answer is, if you expect the consumer ISP to allow full bandwidth to all of these sites, it's going to significantly raise the cost of bandwidth per end user. So we're complaining that consumer ISPs are demanding money from Netflix, but the alternative is to demand more money from the end user or eat the costs. We know eat the costs is never an option in the US market system :). So where's the money coming from? If the consumer ISP started charging people more for this, people bitch about being charged more rather than bitch about crappy Netflix.

Perhaps Netflix's tier 1 should pay for a larger peering pipe to the consumer ISP. But where's that money coming from? They're going to increase Netflix's rates, but even then, the consumer ISP would have to have the proper equipment to handle the larger peering pipe.

I don't really agree with the entirety of either Netflix or the consumer ISP (AT&Ts) arguments, but peering bandwidth has always been a balancing act, especially with multiple networks you have to peer with. This is why we have CDNs to begin with, and CDNs are paid for by the content producer, and they in turn either pay the consumer ISP to host their gear, or work with the consumer ISP to come up with a mutually beneficial decision. In some cases, the reduced bandwidth flowing through the peering reduces the ISPs costs that they can justify hosting the CDN equipment without asking for any money.

I do agree that it's wrong for a consumer ISP to purposefully lopside their peering arrangements to hurt a competitor, just like I agree that there's nothing wrong with the notion of paying an ISP to host a CDN appliance. Given our lobbying system, do you really think that net neutrality legislation will even begin to address the many nuanced aspects of this issue?

but it *is* a net neutrality issue

[Chirs]

Given that they're specifically asking *Netflix* to pay extra. That's not just a peering issue, that's a type of traffic issue, which makes it a Net Neutrality issue.

It would be a straight peering/transit issue if the Tier-1 ISPs just told Cogent "your traffic isn't balanced, pay for the imbalance" without bringing up what type of traffic it was. In that case Cogent could pay the extra and then charge Netflix more for upstream. Netflix would then pass the costs on to their customers or would find a new ISP.

Re:but it *is* a net neutrality issue

[laird]

They're not asking Netflix to pay anything for transit that Netflix is buying through Cogent - they paid Cogent for that bandwidth.

AT&T is an ISP, who delivers bandwidth to customers. ISPs do peering arrangements with other ISPs because they exchange data with each other roughly equally, and it make more sense to exchange bi-directional traffic for free than to waste time and money billing each other for charges that would roughly cancel each other out.

Netflix is asking for a peering arrangement with AT&T. Netflix isn't an ISP, they are a content provider. Content providers pay their ISPs for transit to push data into the internet for delivery to consumers. And in particular, Netflix doesn't exchange balanced traffic with AT&T - they push a lot of traffic into AT&T's network, and don't receive any traffic, so it's a completely one-sided traffic flow. And that you pay for.

It's not an issue of Net Neutrality. Any content provider who wants bandwidth from an ISP pays for it. And there's no indication that AT&T is differentiating between Netflix' traffic and anyone else's, which is what Net Neutrality is about. If anything, Netflix is demanding preferential treatment over other content providers (who pay for bandwidth, and don't have peering arrangements), and they're trying to use their market power to push AT&T into giving them preferential treatment. Which is exactly the OPPOSITE of Net Neutrality.

Netflix isn't stupid - they know all this quite well. So Netflix wanting to peer with AT&T and talking about Net Neutrality is a bunch of BS hand-waving trying to trick non-technical people into complaining about AT&T, generating some faked-up bad PR to pressure AT&T to sell bandwidth to Netflix cheaper.