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.

[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.

[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.

[schnell]

NetFlix using a Tier 3 provider would resell AT&T, who would charge the Tier 3 provider for bandwidth, which would essentially charge NetFlix for bandwidth

Kinda sorta. Here's the problem which makes the situation a little more nuanced than it appears at first. Think of this more like one of those occasional disputes you see where "DirecTV stops carrying ESPN because ESPN jacked up their rates" or something like that. One side wants to pay less, the other side wants to charge more, and it's tough to easily pick out who the good guys and bad guys are in that kind of situation.

Netflix buys most of their bandwidth from Cogent. Cogent has historically been the Wal-Mart of bandwidth - they sell dirt cheap but scrimp on quality to do it. The Tier 1 ISPs have said to Cogent, in effect, "you are not our peer. You will buy bandwidth from us rather than getting it for free," and Cogent doesn't want to pay. That constrains the bandwidth between Cogent and the Tier 1s (which Cogent is definitely not).

Netflix has only gotten involved because, as Cogent's #1 customer, they are feeling the pinch of Cogent's bandwidth crunch. Remember, Cogent is no stranger to peering disputes. The Tier 1s have said to Netflix, in essence, "we aren't upgrading our bandwidth to Cogent for free, and if you want your customers to have better performance you can connect to us directly instead of going through Cogent. Oh, and by the way, you're a content provider (albeit a huge one) and not our ISP peer so don't expect to get it for free, either."

It may sound like a Net Neutrality issue, but settlement-free peering vs. purchased transit has been a contentious issue since the mid-'90s if not before, and it has always been sorted out among the ISPs rather than being regulated by the government. Peering and its market dynamics have always been one of the most sensitive topics among ISPs, but it has almost always been dealt with inside the industry without exposing its gory details to the public - just like how you rarely hear about those "cableco vs. content network" disputes even though those negotiations are always going on... you only hear about it when the crap really hits the fan.

It's a perpetual issue that pits the Tier 1s vs. the Tier 2/3s, and always will be: the smaller ISPs want free peering of course, and the bigger ones don't want to give it away. The Tier 1s argue that they have to pay for a much larger network infrastructure than the Tier 2/3s so they are in effect subsidizing the networks of the smaller ISPs if they peer for free; the Tier 2/3s argue that they shouldn't have to pay to connect to other networks when the end result is (theoretically) better service for everyone.

It is a dangerous and very slippery slope to cast peering as a "Net Neutrality" issue because it invites the government to stick its nose into a topic that the world's ISPs have quietly managed among themselves for many years. "Settlement-free peering for all" sounds good at first blush but creates a dangerous precedent potentially for content providers to be considered as networks. What if CNN.com decides it doesn't want to pay for bandwidth anymore and wants all the ISPs to peer with it as a network for free? What happens when bobshardwarestoreintuscaloosa.com makes the same request? Where do you draw the line? Why should any business pay for transit bandwidth when it is providing content that users want to see? You could theoretically see the whole cost of the Internet flip onto the consumer ISPs if you follow the model to its furthest conclusion.

Another side note - it's not entirely true that "subscribers pay for their Internet, and content providers pay for their hosting." Larger ISPs factor in the revenue of paid transit to their business model - and they *always* have, since the earliest days of the commercial Internet - so that is in effect

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.

[postbigbang]

This isn't telephony. It's a data communications issue, upon which rides both time-sensitive data (audio, video) and non-time sensitive data. AT&T's arrogance is that of Southwestern Bell's (remember, this is not the AT&T of old) vision for profits.

It's a monopolistic view. It's the old "we own the highway" versus "we gave you rights of way because you were a municipal and regional utility". I say we reclaim the rights of way, and meter AT&T for their belligerence. That'll fix it for everyone.

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

[DamnOregonian]

I'm the senior network engineer at an ISP. Your assertion of no-cost is utterly incorrect.
Here in the Seattle area, cross-connects typically happen at the Westin building. I assure you it's plenty expensive for cross-connects before you even factor in equipment (multiple 10Gbit optics and line-card ports).

The issue is actually that ATT wants Netflix to go chew cud in response to Netflix saying "You should peer with us for free."
http://www.reuters.com/article...

"“Netflix believes strong net neutrality is critical, but in the near term we will in cases pay the toll to the powerful ISPs to protect our consumer experience. When we do so, we don’t pay for priority access against competitors, just for interconnection,” he wrote, in relation to the ongoing debate over the future of net neutrality and paid agreements between Netflix and Comcast."

You're being caught up as sheep in a war between capitalist organizations. This isn't even an issue of net neutrality.
ATT isn't asking Netflix to pay for traffic transited into their network.

"In his original post, Hastings said internet service providers should give content companies adequate network connections for free, and singled out Comcast for supporting "weak" internet traffic rules."

Regardless of your *opinion* on costs, forcing an ISP to interconnect with someone else is *not* net neutrality. Net neutrality is simply the buzz-word being used by the combatants to rally their supporters.

WE pay

[btpier]

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

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.

Netflix should charge fees back to customers

[hawguy]

Netflix should charge back whatever fees they pay to Comcast back to their customers that view content via Comcast. This lets the customer see the true cost of their ISP.

Why should users of Google and other ISPs that don't charge fees to Netflix subsidize Comcast subscribers?

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.

Re:I'm already paying AT&T to deliver Netflix

[TubeSteak]

FTFA

Interestingly, there is one special case where no-fee interconnection is embraced by the big ISPs -- when they are connecting among themselves. They argue this is because roughly the same amount of data comes and goes between their networks. But when we ask them if we too would qualify for no-fee interconnect if we changed our service to upload as much data as we download** -- thus filling their upstream networks and nearly doubling our total traffic -- there is an uncomfortable silence. That's because the ISP argument isn't sensible. Big ISPs aren't paying money to services like online backup that generate more upstream than downstream traffic. Data direction, in other words, has nothing to do with costs.

**in other words, moving to peer-to-peer content delivery

AT&T + friends just don't like provisioning more bandwidth for companies that don't directly make them money.

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.