I saw Reed Hastings’ blog yesterday from Netflix asserting in rather dramatic fashion (with diagrams) that ISPs should build facilities (he said provide, but those facilities have to be built) to accept all of Netflix’s content – indeed all of the content on the Internet – without charge. Failure to do so, according to Mr. Hastings, was a violation of “strong net neutrality rules” and bad public policy. I thought it might be helpful to unpack those assertions so we could get right down to the core of Netflix’s rather radical proposition — that people who don’t subscribe to Netflix should nonetheless pay for Netflix. Here are some undisputed facts upon which everyone should agree.
First, let’s all accept the fact that the advent of streaming video is driving bandwidth consumption by consumers to record levels. Increased bandwidth consumption and faster broadband networks like our Gigapower service in Austin, Texas (and soon Dallas) are requiring all service providers to drive more fiber into their networks to create the capacity necessary to deliver those services to consumers, whether the service providers are delivering a wireless or a wireline product. This phenomenon was at the heart of our Project VIP investment announcement in November 2012 and it is true of companies like Cogent, Level 3 and CDNs like Netflix as well.
Second, we should accept that companies must build additional capacity to handle this traffic. If Netflix was delivering, for example, 10 Terabytes of data in 2012 and increased demand causes them to deliver 20 Terabytes of data in 2013, they will have to build, or hire someone to build, the capacity necessary to handle that increased volume of traffic. That increase in traffic from Netflix is, by the way, not only the result of a likely increase in online viewing by existing subscribers, but also due to an increase in Netflix’s customer base (it announced a 33% increase in subscribers from 2012 to 2013 — good for Netflix).
Third, if Netflix is delivering that increased volume of traffic to, say, AT&T, we should accept the fact that AT&T must be ready to build additional ports and transport capacity to accept the new volume of capacity as a consequence of Netflix’s good business fortune. And I think we can all accept the fact that business service costs are ultimately borne by consumers.
Mr. Hastings blog post then really comes down to which consumers should pay for the additional bandwidth being delivered to Netflix’s customers. In the current structure, the increased cost of building that capacity is ultimately borne by Netflix subscribers. 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 – not just those who sign up for and use Netflix service.
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, and in rather self-righteous fashion. Netflix may now be using an Internet connection instead of the Postal Service, but the same principle applies. If there’s a cost of delivering Mr. Hastings’s movies at the quality level he desires – and there is – then it should be borne by Netflix and recovered in the price of its service. That’s how every other form of commerce works in our country. It’s simply not fair for Mr. Hastings to demand that ISPs provide him with zero delivery costs – at the high quality he demands – for free. Nor is it fair that other Internet users, who couldn’t care less about Netflix, be forced to subsidize the high costs and stresses its service places on all broadband networks.
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.
James, here’s what I don’t think you get.
Your customers pay for a connection to the internet. Now whilst you and I know there isn’t a physical thing or place called that, they don’t.
That means, they want to be able to access anything THEY want on the internet. They don’t want to connect to AT&T and give you money for the sake of it. They don’t want to just access the bits of the internet you like. They want to access anywhere they want to go.
If there is a lot of traffic on YOUR network, then it is irrelevant where it comes from. YOUR customers requested it. YOUR customers expect you to prove “the internet”.
What you are tactically saying here, is that you do not want to provide to them the service they pay YOU for. Instead, you’ve found one particular popular destination that YOUR customers want to use… and have decided to play games.
If you cannot, provide your customers with the service they want – an internet connection – on your current network, then you have two choices:
1 – Upgrade your network so you can provide the service you sell to your customers. Doing anything else is cheating your customers – you arent offering the service they pay you for
2 – Alternatively, if you don’t want to, or cant, provide the services your customers requested from you, follow Time Warners lead and get out of the ISP business.
Saying you will provide a service and not delivering is theft.
Then what exactly are customers (over) paying the ISP providers for?
Your assertions are ridiculous. I, as an AT&T customer (which, if you continue to make these absurd assertions I won’t be for very much longer), am already paying YOU for bandwidth. If you were giving me bandwidth for free, you might have a point. But you’re not, so this whole thing amounts to you guys trying to double dip.
When you charge customers for premium services that are advertised to deliver higher quality video then AT&T is benefiting from having this content available as well.
I don’t completely buy into Hastings arguments. However, your perspective here is even more skewed.
If you’re insisting Netflix has to pay you to deliver content to your customers, can you remind me what exactly it is your customers are paying you for?
The internet users pay to access the internet -Not only Netflix. No matter where we go, we pay for certain speed and that is expected. We pay you for it, you should deliver it without filtering where we get our information/entertainment from.
We pay you for a service. Don’t be arrogant and greedy and deliver it.
What will happen when another service gains popularity? Are you going to restrict access to it too?
Please be smart and make your customers happy. Pretty soon someone like Google fiber will take off and they will stand for what you are not and you will loose more and more customers.
Bandits in the Old West were tried and hanged. I earnestly hope a similar fate awaits you and your cronies as you engage in extortion on the Information Superhighway.
And this opinion is one of the primary reasons why I canceled my at&t account and went to another provider. Maybe it’ll even out all those charges you guys do for “texting”, which costs next to nothing.
Nice analogy Jim. Except your ISP business is not structured anything like the USPS. I pay you a monthly fee for unlimited access to the Internet at a set speed. This means I pay you for the delivery of whatever content I choose at the speed you have sold me. I don’t pay the USPS a monthly fee to receive mail. They are funded by postage, not taxes or subscriptions. If you’ve oversold your network and can’t provide the service that you’ve promised to thousands of customers due to the fact that they’re actually utilizing it at the rates you’ve sold them, then the onus is on you as you have been participating in unethical business practices. You are responsible for building out your network to be capable of supporting the bandwidth you are selling. I think you will find your customer base is not even remotely in agreement with you. If the telcos and cable companies didn’t have an oligopoly over Internet access and have legislature in their back pockets, I can assure you that this attitude would cause you to bleed customers. Much like T-Mobile is turning their focus towards customers and away from their allegiance to the telco business and causing you to bleed in the mobile sector right now, services like Google Fiber, Gigabit Squared, and Digital West will make you bleed in the ISP sector in the future. Your piece was nothing more than a spineless effort to take the spotlight away from yourself and instead turn customers against each other.
As an (ex)-AT&T customer, I agree with my fellow customers here in saying that we (consumers) have already paid for the bandwidth that we chose. If Netflix requires us to have a 20Mbps pipe to get HD, then that’s how much I would pay AT&T to get that quality. So yes, we paid for it, so we shouldn’t be over-charged or penalized (capped) because we use Netflix.
Come on folks! I don’t work for AT&T but have been in the telecom business for a good chunk of my career.
AT&T (and other ISPs who have to build the facilities, trench the fiber and support the network) is/are right.
If Netflix doesn’t pay for the bandwidth then the costs will be passed on to everyone. That means that the remaining 90% of us will also pay for what 10% receive.
Video, by definition, is the highest bandwidth use on the internet.
You pay tolls on roads so developed each time you use them don’t you? You pay for every watt of power and gallon of water you use …
Be thankful that, so far, you don’t have to pay per amount of data you use at home. AT&T and other ISPs look at their overall network use and set what they believe is a fair price even though many consume multiple of others data amounts. This will continue if they can charge other services who bill for what they offer. If they can not, YOU will pay much more for what you get today.
Be careful what you wish for …
So, I’m confused. I was under the impression that AT&T customers receiving internet access paid a fee to receive a certain speed (correct me, it’s your field not mine). So, in theory, I should receive 45mBps regardless of the content I choose to consume. Whether I watch on YouTube or surf on Chrome, I’m under the impression that I’ve paid for 45 mbPs.
It appears that you are unable to provide your customes with high-quality service, as promised, at the speeds listed, for the price listed.
It appears you’ve chosen a way to explain the internet to your customers that doesn’t accurately reflect how the internet works or what they’re actually paying for.
This failure is AT&T’s responsibility. I am paying AT&T to provide me with Internet. They are my internet provider. And there needs to be transparency for what I have purchased or marketing that accurately reflects the issue.
Because what you’re telling me is that I’m not getting 45mbPs. And, I get that. But, most don’t and your product, if NetFlix pays tolls, is by no means and accurate reflection of reality.
There’s a lot of dark fiber lying around, I’m told. Hopefully, the government will get around to making the internet a utility.
This post is really disappointing and shows how out of touch with consumers and entitled larger ISPs are becoming.
Mr Cicconi, your customers already pay for Netflix if that was an honest question. Bandwidth heavy internet content providers shouldn’t have to worry about being extorted by internet service providers for proper Quality of Service.
Plenty of additional bandwidth intensive content is on it’s way. Plan & build your network accordingly and stop playing the sympathy card.
“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.”
In the above example you are the post office. If for some reason the post office cannot handle the volume of mail it receives it is incumbent upon them to upgrade their infrastructure to meet the demands or face losing business to UPS and FedEx. Other commentator’s are exactly correct.
USPS doesn’t whine about Amazon or Ebay sending out excessive amounts of packaging, they buck up and handle the volume. They also don’t request that Amazon or Ebay pay for more mail trucks or gas costs. In the same way AT&T should shut it about the costs of delivering the internet to the end user, get it done and shut up.
The US is and has been laughably far behind the rest of the civilized world in overall internet bandwidth since anyone cared to measure it.
You (along with other telcos and cable companies) have made sure that you get along with the absolute minimum investment in infrastructure possible, irrespective of trends in internet usage that any fool would have recognized 10 years ago. You could have laid more fiber, earlier, but that would make shareholders angry because profits would have been adversely affected. Oh no. Can’t have that.
And now, look at the situation in which you’ve put yourself. Look at all this bandwidth your customers are using! These mean old companies like Netflix and Amazon are the real problem, because they insist on offering services that people like! Why, back in my day, people got their movies through the mail and they liked it, by golly.
It’s over, and you’re the architect of your own demise. Who’ll fill in the void? Google? LTE meshes? Who knows? The point is that people adapt quickly and companies and organizations that invest in being innovative instead of complaining about change are the ones that will prevail.
this is just ridiculous. As a customer, I am paying the ISP to deliver me internet content, at the speeds advertised by the ISP. It should not matter how much data Netflix is pushing to the ISP. Every piece of data is REQUESTED by a PAYING ISP CUSTOMER. Netflix pays cogent/level 3 to send the data….and the customers are paying the ISP to deliver that data.
if the ISP is unable to handle the traffic requested by their customers, then the ISP should be responsible for paying the upgrades, not netflix.
This is solely the ISP’s responsibility to pay for the required upgrades to handle the capacity that their customers are requesting.
Why should your customers pay you to access the Internet when you turn around and hold the internet ransom with access fees to services we already pay you to access?
Maybe if you spent money on improving your networks nationwide instead of hoarding money for your investors then this problem wouldn’t exist.
So if your postal service analogy was followed to its logical conclusion, should we all be paying the USPS a monthly subscription and on top of that buying postage for the mail we actually send/receive? Nice try.
The problem is this: When customers received movies through the mail, they assumed that the cost of postage would be bundled with their subscription plan. Consumers have always expected that it would cost them to send mail, not receive it.
But the postal service does not charge residents a premium for keeping a mailbox at their home. AT&T does — AT&T not only charges consumers for access to the Internet, they dupe consumers into believing that they can buy stability by paying for faster broadband speeds. And then they strongarm internet services like Netflix into paying AT&T more so that their services run smoothly through the pipes that AT&T customers pay to access.
It would be as if the postal service required someone to buy postage stamps to send mail, and then required customers to pay the mailman in order to receive a letter.
Consumers don’t need to understand the mechanics of the internet in order to access it. They do, however, understand that AT&T is double dipping. And AT&T’s post painting Netflix as the whiners runs the risk of backfiring — Netflix isn’t the only one complaining…so are AT&T customers. Are they whiners too?
This comes off as incredibly disingenuous. Netflix is threatening cable TV, and you are strong-arming them into paying you reparations for the subsequent loss in business you are experiencing. It is your responsibility to provide your customers internet access, and it is Netflix’s responsibility to provide their customers with content. Period. Your inability and unwillingness to serve your customers is your problem, and it will only result in further losses going forward. Get with the times, or get left behind.
Shipping is a great analogy. One person pays the cost of shipping not two. When you’re ready to switch to sender pays, make the last mile connection free to consumers. Otherwise you’re just trying to double dip on both the sender and the receiver. Next time UPS charges me to deliver a package to my house I’ll let you know.
So stop participating in the internet. You knew what you were getting involved in. You have a choice.
Oh, and give back the CAF money you never used to wire rural broadband.
Pot, meet kettle.
Unless you’re suggesting that AT&T customers pay by the megabyte for the bandwidth they use (which would have your entire customer base jumping ship), then the point of all this is clear: More double dipping from AT&T.
Surely AT&T stockholders expect something a little less transparent from their executives than this obvious money grab. In the long run, it can’t end the way you think it’s going to.
Netflix paid USPS to deliver movies, but customers didn’t have to pay USPS anything to receive their movies. The internet is different, because customers already pay their ISP to deliver their content.
While customers who stream movies use more bandwidth then those who don’t, they’re paying for a plan that offers unlimited data usage.
AT&T’s post is similar to operating an all-you-can-eat buffet, and then complaining that customers who eat more then one plate drive up prices for everyone else… don’t offer an all-you-can-eat buffet if you don’t like the business model! AT&T could charge customers by the gigabyte instead, but you’d lose to your competitors.
As long as a customer isn’t doing anything illegal, it shouldn’t matter what content they want… ISPs should not be allowed to charge certain senders for delivering content that the customer has already paid to receive.
This is more akin to the postal service charging netflix higher rates to deliver DVDs as opposed to their competition, because their service is so popular the postal service can’t keep up with the demand.
I don’t even use Netflix, and this post seems to be nothing more than excuses for a company that doesn’t want to innovate and upgrade their infrastructure.
AT&T customers just want to get the bandwidth they pay for, regardless of what they are downloading and from whom.
Sounds like you’re asking for the right to charge AT&T customers something extra for Netflix content, by charging Netflix a fee which they would then pass on to your customers.
In addition to charging customers for bandwidth, you want the ability to put an additional tax on the services they pay for.
Update your infrastructure or leave the Internet business. The public has had enough of you lobbyists lying through your teeth. America has some of the worst Internet in the entire western world thanks to your lobbying. We are living on technology from the early 2000s while we keep getting charged more and more for outdated technology. This is corporate robbery. How do you sleep at night?
We pay you for a connection which is far from cheap. ISP profits are huge. Comcast is buying EVERYONE with their money. AT&T like all the other ISPs are raise prices constantly.
Netflix like ALL companies on the Internet pay lots of money to their connection to the Internet.
Looks to me like you guys not only want to charge TOLL roads on the Internet and double dip. But you guys are complaining about Netflix growth that COMPETES with your TV services.
Not exactly independent or fair.
Since there is little competition for ISPs for most of us, you guys think you can do whatever you want.
Dear Mr. Cicconi,
Your customers already pay for the level of internet connection they want, that is the reason you have different tiers of speed. How rapidly has your customer base been upgraded to higher speeds of internet over the past few years? I’m willing to bet it’s pretty substantial, and considering your admission that Netflix is the largest growth in internet traffic your company has been experiencing, it seems you are directly benefitting from the demand Netflix has created for faster internet speeds. And now you write this article complaining about your own customers and trying to justify your desire to penalize them over the very service they are paying you for? You should be absolutely ashamed.
Your treatment of your customers is abhorrent, and to your own detriment. The monopolies you internet providers have abused for so long are coming to an end, and whichever company treats people the with respect and quality service for a reasonable price will crush all the others. Now is the time for your company to show everybody you actually value your customers, and instead you show the disdain you have for them. Shame on you. AT&T is digging it’s own grave.
So, if Netflix should pay AT&T, that means I can stop paying AT&T, right?
This is not a valid argument.
For example if I receive post by email, we all know that the cost of the stamps don’t cover the cost of delivery. I am sure AT&T is benefiting from my taxes because they surely receive/send a lot more mail than I do. So are they protesting that they are getting the better side of the deal?
Anyway what we need are safeguards against the bandwidth super-powers from forcing arbitrary price increases. Especially if it does not involve a qualitative improvement.
I guess if the FCC can draft the standards that allow a fair price increase based on qualitative improvements and an appellate process that will also hear the consumers when prices go up then everyone wins.
I guess that should be the keystone.
Thank you Jim for your absurd view whats right and wrong. Please feel free to send me a check equal to the cumulative data used from your pathetic response used.I paid for access already and have not used more bandwidth than i contracted for.Also please refrain from strong arming any of the other billions of other usefull content providers. Enjoy your temporary relationship with AT&T.
I pay my ISP to deliver whatever content I desire to watch and or listen to. I do not expect my ISP to place a Toll on the content that I want to watch and listen to.
We pay you AT&T for that service. Delivering that content to me regardless of service is your cost of doing business..
When you AT&T throttle bandwidth of content, I wish to watch then you are failing me as a customer.
ISP’s cannot have it both ways. I pay you deliver, you cannot then go to the services I am using and demand them pay as well..
Jim Cicconi you just don’t get it. If you don’t change then your base will move and find other options. Chad Henshaw did an incredible job outlining the issues and left you with an excellent recommendation. Either you support your customers or you don’t and it’s clear you don’t.
Jim, you come off like a distortionist who is lying to the public. Netflix says (and every intelligent person agrees) that customers are ALREADY paying for a connection to the Internet services that they want as part of their bill. What the hell do you think your customers are paying you for? Static HTML pages? Get real.
This kind of logic reminds me of the old AT&T; you know, the one that got broken up for being an abusive monopoly.
If I pay for 50Mbps of transit then give me that bandwidth. If 30% of your traffic is coming from one place, then engineer your network to accommodate that.
If you’re saying that your pricing didn’t anticipate people using your network as much, then that’s another thing. But then perhaps you can explain why every other civilized country on earth charges less for more bandwidth. At the very least, be honest and charge your broadband customers for the service you’re providing and stop trying to make back-end deals.
Right now it mostly looks like you’re just trying to be greedy and sell your broadband customers to content providers.
As you can see Jim, most people don’t agree with you. You are basically changing the rules based on the money being made by others and not by you. Netflix has cut into your own over priced videos services and like all the other providers and you don’t like it. Now, you want to say, ‘Oh, it’s so much bandwidth you are all using’ so you can not only charge Netflix more and any other site you wish but you already have bandwidth caps on your plans so you can charge us more.
It won’t do and your true motives are very clear.
Using AT&Ts logic, cable subscribers that watch sports should be paying more.
Hi Jim!
Thank you for your blog post! I’m an AT&T customer and I’m here to help you find answers to any questions you might have about your AT&T Service. We’re very glad you chose AT&T.
There are a few common ways you can troubleshoot the problem you mentioned. However, it appears you’ve already gone ahead in your post and given me, the customer, the responsibility of troubleshooting it for you. But no problem! I understand technology can be intimidating and I’d like to make every effort to help you understand your service commitment! Let me see what I can do!
–
Alright! I’ve researched this problem, and I think I have a solution that might work:
1. Have you tried writing a blog post about your issue on the AT&T Public Policy Blog? The easiest way to solve your bandwidth issue is to deride the customers who want it!
2. Have you tried taking a job at AT&T? Seriously! You sound just like an AT&T employee! Take our personality quiz! It’s only 99 cents with a 2 year contract!
3. Draw little cat doodles.
4. Charge me and only me an extra $650 million for U-Verse Internet, but only let me experience DSL Speeds. When I call for assistance, come repair (use the word “update”) my outdated copper line by placing an old penny on the grass above where it’s buried. Think of it as an investment. One day, I might even crowd-source the postage to send it back to you. By horse, of course. Nothing too thoroughly modern for AT&T.
I’m not usually a proponent of regulation. However if this is how AT&T thinks about this issue, I strongly feel that the FCC should regulate AT&T’s service under Title II.
AT&T’s argument that they should be able to both charge their customer to access the internet AND charge other tier 1 carriers to access their customers is as absurd as it is dangerous to the future of the internet
If Netflix pays the postage to send a DVD, does the usps charge me again to deliver that same DVD? I already pay you for internet speed. Now you can’t deliver? Cut your dividend and spend some cap ex on improving your infrastructure.
With this attitude it’s only time before AT&T is obsolete. Get with the times!
Jim – I am not feeling fully confident in my connection, but yet you state on your website I should when I just want to watch a movie. I’ve taken the liberty of quoting your website below just in case you’re not sure why I decided to pay your company so that I can watch Netflix. At Least add a disclaimer about high bandwidth sites if this wasn’t your intention.
“A connection you can count on”
“With our advanced digital network, U-verse High Speed Internet provides a reliable connection to keep you connected to everything you love. So you can video chat with friends and family, work from the home office, or just watch a movie, all with complete confidence in your connection.” – AT&T website
*Disclaimer*
I am both an AT&T and Netflix customer.
Will Mr.Ciccoi ever respond to the comments here? AT&T is clearly trying to double-dip here, and the post office analogy that others have pointed out is apropos. AT&T’s days are numbered, and its business model is as enduring as that of Blockbuster and Hollywood video. No one (except for disingenuous and avaricious execs like CIcconi) will grieve when AT&T deservedly joins the ash-heap of deceased enterprises.
As a customer of a internet service provider, I am ALREADY paying a fee for the internet I am using. As a customer of Netflix I am paying a fee for streaming service. Why do I need to pay for something I am ALREADY paying for?!? How is it ok to double dip the consumer for a product your “user agreement” already says you have paid for? Answer that?
Imagine I take a taxi. Some people drive further than others and the long trips take more gas, so the taxi driver wants to charge a fee to the businesses that are located on the far side of town.
The taxi driver COULD charge by the mile, but doesn’t, either because she’s leaving from the airport (where local ordinance requires a fixed rate) or just because all the customers in this down got FED UP with cheating taxi drivers and now refuse to drive anywhere except at the fixed per-trip rate.
This would all be moot, and none of the businesses would put up with it if it weren’t for the fact that there are only a couple of taxi medallions so there is absolutely no competition. If the taxi drivers refuse to drive on Level 3 Ave then no one will be able to get to Netflix.
I’m done here, except to say that it’s the taxi drivers who are the villains in my analogy.
Your position is nonsensical. Netflix is currently paying you to provide higher bandwidth. This means that Netflix HAS bore the cost or they would not have the capability to provide the higher bandwidth in the first place.
Furthermore, you are providing the higher bandwidth because Netflix pays you to, which means that both Netflix AND AT&T possess the capability. But in addition to paying its own costs, Netflix is also paying you a premium so that it can provide a quality product to its customers regardless of their provider.
On the other hand, AT&T is charging customers for advertised bandwidth, then charging Netflix for that same bandwidth, all while complaining about delivering its product as advertised.
Your fair share is in the tiers of service you offer. Those that don’t subscribe to Netflix don’t have to pay because they can buy a lower bandwidth plan.
Do you refund people for bandwidth they didn’t use for the month? Of course not. So stop trying to create a straw-man argument that distracts people from the fact that they are entitled to the bandwidth they pay for and it’s not their problem if you can’t provide what you’re willing to sell.
Just because you get your Internet access for free doesn’t mean the rest of us do. We don’t and we overpay for it. Who exactly is getting this ‘free lunch’ besides YOU?
Ha, AT&T just got pwned for trying to call out the kettle. Now, they’ll probably just give up on blogging – just like they have given up on providing reasonable explanations and excellent service.
If I were to apply your logic Mr Cicconi, you should be paying me for sending the data to my house.
IPS are already charge tiered fees based on speed and now you want to collect from Netflix? Fine – charge Netflix and then raise the speeds for one low flat rate. Can’t have your cake and eat it too.
You’re biting *both* hands that feed you.
First, let’s re-live this sentence: “First, let’s all accept the fact that the advent of streaming video is driving bandwidth consumption by consumers to record levels.”
Now let’s change the word “consumption” to “demand”, which is what you really meant, right? And given that what you offer your customers is bandwidth, you’re accusing Netflix of creating demand for you. Sounds like a sales channel to me (maybe you should be paying them).
Second, remember this: you’re screwing over your customers. We know your greed is making the cost of our online services go up. We also know that you’re throttling sites that refuse to pay your tolls. Which, results in a lousy experience for us – the customers who have *already paid* you to deliver a GOOD experience.
Well done AT&T. I can’t imagine another company in history being this arrogant. Oh wait…Comcast. You’re tied.
Enjoy your monopolies and the gov handouts you receive to build that infrastructure while they last. You’re like taxis in San Francisco. We the people will find a way to get around without you.
Jim,
Your responsibility, as the ISP, is to provide your customers with an internet connection. It is not up to you to decide what they do with that connection. Unfortunately, the moment that you do decide to implement a policy or practice they dislike, as AT&T has a monopoly on broadband in many markets, many customers are not free to pick another ISP with more favorable practices. As such, you should be using the money you make from YOUR customers to improve YOUR network. May I ask how much money did AT&T invest in infrastructure last year? Please, by all means, continue to complain about how much trouble it is to carry data for your customers, and, all the while, continue to pocket the revenues. You may have bought the lawyers on Capital Hill, but most people can see through your ruse. Don’t come to your customers asking for sympathy!
The Final statement “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.” really bothers me. Consumers are already paying you to deliver the contents they paid for, it is not their responsibility to pay EXTRA just because they want the content to be delivered to them just because the BANDWIDTH they use. AT&T, unlike other ISPs already cap their customer at 250GB per month to use U-VERSE, why are you asking them to pay additional fees just because they want to stream?
This is 7th grade logic. AT&T PROVIDES internet. Netflix is a company doing business OVER the internet. Therefore, AT&T should provide access. End of story, case closed. If AT&T and companies alike CANNOT provide access then GOT OUT of the business and stick to cable and phones..lol. You guys remind me of a two year old that won’t let go of his cookie before dinner. wawawawa…I don’t wanna upgrade MY network..wawaw. I don’t want to spend any money…wawawwawwa. Cry babies. The only amusing part of this whole thing is the amount of money AT&T, comcast etc. etc. is going to waste trying to defend their flawed, greedy logic.
If AT&T and other ISPs would charge consumers per giagabyte sent & received, then this problem would be solved; heavy users would pay more for internet service than light users. So call Netflix’; give them net neutrality but charge end users per gigabyte, and see how Netflix likes it.
TIL that you don’t have to understand how the internet works to be a telecom executive.
Hi, I am an AT&T customer and I don’t subscribe to netflix, but I do subscribe to Hulu and Amazon Prime. I pay almost 50 dollars a month for a slow six mbps dsl connection. I don’t think At&t should give netflix moneys or anything like that, but I do really wish that I could have faster internet. Where I live the 6 mbps is the fastest at&t offers. While most of the time the videos I watch don’t buffer or slow down, it is too slow to deliver the content in HD most of the time.
So as a customer I would appreciate better infrastructure. With 4k video being offered on youtube now, the need for more bandwidth is only going to get larger, even if it’s not just for netflix. It isn’t netflix’s fault that you don’t have faster speeds to offer me, it’s the choice of AT&T to not invest in upgrades.
People don’t seem to understand that bandwidth is limited. You may be paying for speeds up to 50Mbps but if the cables are crowded and full because everyone is watching movies, you sure aren’t going to get 50Mbps. Now, should At&t purposefully slow down Netflix traffic just because there is more of it? Absolutely not. However, if Netflix wants more bandwidth so their movies run silky smooth, then why shouldn’t they not have to help build and pay for that infrastructure to make it happen. Internet bandwidth isn’t an unlimited resource. I sure don’t want my internet to be running slow because Netflix gluttons are eating up all the bandwidth.
So, as I see it, what ATT is doing is charging on both ends of the connection to ensure proper delivery of content. And here I thought I was entitled to any content I wanted with my 15/3 connection with out restriction for the premium price I was paying. Silly me….
I think your facts are correct and I agree with your assertions with regard to Netflix’s absurd position. However, I think there is still one question unanswered:
Is it fair or appropriate to advertise a specific rate to a customer without guaranteeing that rate? For example, your website advertises a 12 Mbps connection for $24.95.
As a customer, shouldn’t I expect paying for additional bandwidth would increase the amount of data I am capable of receiving from Netflix? If Netflix is my throttled at a rate under what a customer is paying for then it seems they are not getting the advertised rate.
Take a specific use case: As a customer who wants to stream lots of movies with Netflix I do the smart thing and buy the most expensive package that AT&T advertises (24Mbps for $34.95). However, I find that Netflix is throttled to a lower rate regardless of having purchased a premium package. Am I not getting cheated out of what I paid for?
When I choose to subscribe to an “internet provider” I expect them to live up to their obligations of which I was sold. It’s Simple, I order 15mb of bandwidth and then I use it for anything I want. If I choose to download at full bandwidth all month long then I can period. No matter who is serving it. I quit ATT years ago to use straight talk which uses att’s network for half the price. All I want is a dumb pipe not attitude.
I can’t believe your bosses approved you posting this. Does AT&T really think their customers are ignorant enough to go along with this?
Hello Mr Cicconi,
I’d like to provide a anecdote very akin to the situation you face. You seem to really understand the nature of the internet today.
An entity has a connection to a network, but they send them loads and loads or traffic, day after day. This connection is unfortunately asymmetric in design, as the entity can only send 5-10% of the traffic being sent to them back up through this connection. They are forced to accept the influx of traffic without the ability to become a player in this field due to the technical limitations forced upon them by their provider. These ADSL entities should be able to charge their peering point for this excess traffic, as it seems like this is the only fair way to make sure the system isn’t being abused. How could someone with a 20/1.5 connection expect to play in the big boy market if they cannot afford to update their equipment to cope with the peering needs of their next hop.
The advantage is obviously in the favor of that large conglomerate who’s trying to use their lawyers and lobbyists for some sort of way to just leech off other networks because they can.
This obviously cannot stand, and I for one applaud your efforts to make sure entities utilizing ADSL are compensated for the flood of ingress traffic they receive, and their inability to match that traffic on the egress plane.
Thank you Jim, you are the hero the lobbyists paid the government to tell the people we deserve.
I don’t get paid twice for performing a single service; I don’t see why ATT should get paid twice for accomplishing a single delivery.
I don’t know why people think businesses get a free internet connection. Peering, by definition is between peers. ISP to ISP, Netflix is not an ISP. They should pay for the entire cost plus profit of the impact they have on ISP networks. The same that you pay every month, bandwidth adjusted.
It’s clear that AT&T’s horrible customer service issues stem from the top down.
The vitriol telcom execs seem to have over people using ‘their pipes’ expecting them to provide the service they’ve sold their customers seems like it could be a pretty fascinating and very public example of how people can see what they want to see rather then what’s truly there.
No one, and I mean, no one, cares what at&t or comcast or time warner has on its networks. No one would pay at&t a dime to access at&t’s network. These companies rake in billions in revenue because they provide the value of an internet connection which consists of quality -access the internet- including Netflix and other popular services. At&t customers are requesting data from these services and using the internet connection they pay for to fulfill these requests. At&t is already being paid, and looking at their revenue and profits rather handsomely, to provide quality access to Netflix and other services. The fact that they don’t seem to publicly understand this has to mean one of two things:
1. Deep down they know the truth and this is all a dishonest charade for more money at the expense of the very foundation of their value proposition which they feel they can get away with because of their monopoly power.
2. They live in such an insular and tightly controlled intellectual universe that they, at least consciously, really do believe this nonsense.
Jim Cicconi raises a good point with the shipping analogy when he wrongly says, “It would’ve been neither right nor legal for Netflix to demand a customer’s neighbors pay the cost of delivering his movie.” The underlying network infrastructure for the physical delivery of goods consists of public roads constructed and maintained with funds raised through taxes. So, in fact, a customer’s neighbors do pay part of the cost of a vehicle driving to his house to drop off a disc. The road network is much more valuable because of its ubiquity and neutrality to purpose and content than a patchwork of private toll roads would be. Given the laggardly state of broadband service in the US and the great ease with which AT&T’s policy statement disregards the value of a ubiquitous, content-neutral network, perhaps the public infrastructure model is worth reconsidering?
This is funny reading all the comments which are overwhelmingly against Mr. Cicconi’s piece.
Funny because I wonder if they realize they are advocating to pay more for Internet service they may not be using (Netflix usage).
It’s pretty simple: you pay for what you use, whether you’re downloading or uploading, whether you’re an ISP subscriber (consumer) or content provider. You use more, you pay more.
Whoa whoa whoa. Is this a company’s public policy page or a snarky joke factory? I don’t appreciate wry mean-spirited banter on my phone company’s official page. Extremely unprofessional and unbefitting of the history behind the brand.
ISPs and mobile phone companies seem to think it’s okay to loudly advertise how amazing their infrastructure is and how much it’s improving all day long while quietly complaining about how they can’t keep up with the real world. Not only are we using more data but we’re going to keep using more data, this has always been the case and will be the case for the foreseeable future, it’s not even remotely new; it’s been going on since the days of dialup.
Imagine if ATT could charge Skype, or your even local phone company, to send calls to their customers on their phone network. That is precisely what they are trying to do to NetFlix.
What an obvious attempt at forcing your (garbage) on demand services on your customer base.
I can’t wait until Google fiber and other innovators put you out of your misery, you pathetic excuse of a company.
Your monopoly is THE ONLY thing keeping you alive. You have nothing but contempt from anyone who uses your (garbage) services.
“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”
Isn’t this exactly what the customers pay for?
So you’re not obligated to provide 10mbps that I would (theoretically) pay for? No matter what the data is?
AT&T has completely forgotten that it built the infrastructure into people’s homes under government protection, it had a unique monopoly and assistance to build the system that now allows it to serve us as ISPs. AT&T is trying to sound as if they went out and built it against all odds as a corporation with no help, and that Net Neutrality is now an unreasonable assault on their sovereignty. That is not true. Until four decades ago, AT&T (as well as all of the cable companies) had government protection to allow them unfettered opportunity, without competition, to construct the infrastructure that they now exploit for access into our homes.
If att charges for bandwidth – which it does – is it now going to charge tiers based on who the content provider is?
Or was it a rouse when you put in caps on bandwidth/month hoping the user would never consume it?
In other words: don’t you already provide consumers win N gigabytes of bandwidth/month? Why do you care who it comes from?
Short response to your comments.
People love Netflix. People hate AT&T. So your comments above just make us hate you more.
I’m an at&t internet subscriber and also a subscriber to netflix. I pay at&t for a certain amount of bandwidth into my house, and I pay netflix for the content they provide. My at&t plan covers the bandwidth requirements of the data I stream from netflix, which in fact was one of the selling points, I could have went for a cheaper plan. Why on earth should I need to pay more to netflix when I’m just using the bandwidth I’ve already paid at&t for??? If you’re not willing to live up to your end of our agreement then please don’t advertise it as such.
This is a joke, right? We *already* pay you for bandwidth.
What a joke of a Senior Vice President.
Your customers are already paying for the bandwidth. This is double dipping no matter how you look at it and I hope this gets taken to some sort of a court where they can laugh your ass out of the building.
You’re a greedy pig and this is the same as paying for each shower you take even after you pay for your water bill.
What amazes me is that he thinks his justifications are good. He doesn’t even realize how he is helping the ISPs inevitable collapse. Either new technologies will help add competition to the market, or the people will push for the companies to be split. Just imagine Verizon, AT&T, Comcast, Cox, TWC split into various little ISP companies. It’s coming, maybe not tomorrow, but it is coming very soon and they know it.
WE PAYED YOU ALREADY ATT! If i want to stream hulu, spotify, Netflix, prime and plex you need to understand that I have the right to.
Saying you will provide a service and not delivering is theft.
Jim Cicconi needs to go back and look at what his company provides as a service because his expectations are flawed.
The US Postal Service is paid by everyone. It is heavily subsidized by tax payer dollars. So your analogy only disproves your argument. The neighbors of Netflix subscribers did bear some of the cost of Netflix subscribers receiving their movies by mail.
All commerce uses resources paid by everyone. For example, transportation. When cities grow they decide to upgrade freeways, build public transportation infrastructure, etc., and everyone pays (individuals, businesses) through taxes.
AT&T receives government subsidies to build infrastructure.
This is the last straw, Ive been holding on to my AT&T DSL, the service has been getting steadily worst over the years. Ill vote with my feet. ADIOS AT&T
The US model for ISP pricing has ALWAYS been deficient. In most other advanced countries ISPs offer different plans from 5GB/mth up to 200GB/mth. So users who wish to download a lot of data (eg video content) pay about 2-4x as much as those who want only email and browsing. This allocates the cost appropriately.
The US system is akin to paying a fixed price per month to use as many taxis as one wants in the month. That leads to wasteful over-use (eg leaving viewing room while streaming media is playing). Paying a sliding scale according to how much electricity, gas, taxis, gasoline etc that one uses is inherently more efficient (using pricing signals to balance supply & demand).
ATT has constantly looks for new methods to increase charges for their services. They refuse to invest in state-of-the art technology such as fiber to the home or allow serious competition for potential Internet providers. Their “high speed U-verse” is really 6 MB DSL. Then they require “qualifying” additional phone service to receive the advertised Internet price. ATT unfortunately isn’t a technology company, its become a pick pocket carnival enterprise. No surprise they want to get additional money from Netflix streaming and their customers already paying for the Internet service.
My AT&T mobile, TV and broadband bill last month totaled $450! Your absurd analogy to the USPS demonstrates you have a total lack of comprehension of the value proposition an ISP is supposed to deliver. Even the USPS is more in touch with their customers’ needs and expectations.
With this blog post, you have singlehandedly created the strongest possible desire in me to eliminate that $450 per month I am paying AT&T. I hope millions of your broadband customers see your post and decide like me, to run to alternative service providers.
I’m glad to hear you want to evolve your ISP business model to conform to that of the USPS, which only charges one party in a communications exchange and is heavily regulated. Let me know when I can quit sending AT&T a check every month for my Internet connection, the equivalent of my free mail box in your analogy.
Boy do I feel the fool. Listening to the silliness of Time Warner and Comcast, I always told my self at least I have AT&T.
AT&T does not play those silly ISP games. I buy the broadband and use it as I choose. If that’s adding a device on my network or watching Netflix.
Now it seems AT&T is joining the Time Warner / Comcast dinosaur of ISP’s. I get my broadband and smart phone data through AT&T. I suspect in the near future I will be looking for alternatives to both of those services.
Jim’s argument if fundamentally flawed. And the numerous comments already provided tell us why – ‘double-dipping’ and ‘providing service to the subscriber that they paid for’. The main reason is that ISPs build on the fact that not all of their subscribers will use all their bandwidth they purchased – this is where their profit margin comes from. For example, if 100 subscribers paid of 10Mbps subscription each, the network capacity that should be allocated is 1000Mbps – however ISPs only allocate a smaller percentage – say 40%, to service this entire subscriber base. When there 100 subscribers start using their capacity to the fullest, ISP’s networks start crumbling – and any addition to the network infrastructure would eat into the profits they had been enjoying previously. This is the root cause of the struggle we’re seeing.
ATT, you messed up. As an ATT customer (not for much longer), I can tell you this: you are on the wrong side of this argument. There’s no such thing as too big to fail. Change, or you’ll be left behind.
At least the ISPs are complaining about their upstream connections this year, and not complaining about the people who clogged their network in 2011… the customers.
When a third of the traffic was P2P networks trading video — 99% pirated since there was no Netflix — there was nobody to charge a big bundle.
It will be back to complaining at the customers next year… when Netflix goes P2P.
You sell bandwidth. That’s why you exist. What your customers do with the bandwidth they purchase is their concern.
Besides costs of the actual content, Netflix pays to provide the hosting, and for connectivity from their datacenters to reasonable peering points (They are at every major exchange as far as I am aware). As an end user, you are paying to be hauled to “the internet”. This can easily be defined as the closest major peering point.
Netflix, if they were a smaller company, would have to buy transit to haul them all around the internet to those peering points, but since they are huge, they are already at those points. If they were smaller, there would be a legitimate argument that they must pay SOMEONE for transit — but not necessarily AT&T, Comcast, Verizon, etc …
There is no legitimate basis for AT&T, Comcast, Verizon to demand that Netflix pays for sending traffic into their networks. ATT’s customers are paying you for connectivity, and ATT’s customers are requesting that content. Deliver what your customers are asking for.
Within the USPS example — In fact your neighbors were paying to provide your USPS Netflix service, as USPS has been losing money for decades, and is subsidized by other sources of government revenue.
i pay my isp (thankfully not at&t) for internet services
netflix pays whomever their vendor is for internet and cdn services
YOU ALREADY GOT PAID. TWICE IN SOME CASES.
funny, i don’t see any similar comments from the svp of google fiber…
All I wan’t is for Jim Cicconi or his assistant to read all comments on this page and reflect upon how flawed their understanding of internet is.
I pay ATT, a lot of money, for service. I should be able to reach any site I want and view any content I want, Legally, with no interruptions or slow downs. Will Netflix streaming to my home take up the 45 Megs I pay you for? I think not. You just want your cake and to eat it too.
Well, of COURSE AT&T ought to carry Netflix traffic at no charge. It’s just like when a consumer orders something from Amazon. the customer has already paid for the item, and has already paid with his taxes for the streets outside his home. So, asking Amazon to pay UPS to ship the item is unfair. UPS overnight ought to be free!
Oh, waitaminnit.
Wow, the logic flaws here are embarrassing. Jim Cicconi, how does it feel to obliterate you personal credibility? Reed Hastings stood up and articulated a well reasoned and thoughtful viewpoint. Your CEO asks you to respond with this nonsense as his sacraficial lamb. Embarrasing for you and him.
“People don’t seem to understand that bandwidth is limited. You may be paying for speeds up to 50Mbps but if the cables are crowded and full because everyone is watching movies, you sure aren’t going to get 50Mbps. Now, should At&t purposefully slow down Netflix traffic just because there is more of it? Absolutely not. However, if Netflix wants more bandwidth so their movies run silky smooth, then why shouldn’t they not have to help build and pay for that infrastructure to make it happen. Internet bandwidth isn’t an unlimited resource. I sure don’t want my internet to be running slow because Netflix gluttons are eating up all the bandwidth.”
Because it’s ATT responsibility. If they’re the ones offering them 50Mbit/s connections then it’s their responsibility to give their customers 50Mbit/s. If ATT doesn’t have enough bandwidth to offer their customers 50Mbit/s then it’s ATT responsibility to improve their infrastructure not Netflixs.
If their infrastructure can’t handle 50Mbit/s and they don’t want to build out infrastructure they need to stop offering customers 50Mbit/s service.
ATT made 130 billion dollars in revenue in 2013, over 30 billion of which was net income. ATT has more then enough money to invest in infrastructure but they don’t because they have no competition.
I would suggest AT&T charge their customers per byte transferred… but that would require that they charge a fair rate per byte. If they did, many people’s bill would go down, not up. SOME users would pay slightly more.
Currently the level of oversubscription and greed proves that fairness is nowhere near this equation. The ISP’s continue to pocket huge profit margins and point fingers when they cannot deliver a 2mbps stream over a 6-50mbps access product. If only consumers had comparable choice when selecting ISP’s… then market forces would prevail.
The most popular services on the Internet offer a solution to hauling bytes around… embedded CDN. So you bite all hands that feed you and refuse to save yourself infrastructure costs by moving the source of the bytes closer to the consumers of the bytes. An un-congested backbone, you could have… if you allowed it.
I look forward to Google Fiber, and the next 10 great ideas after that, that diversify the access market.
AT&T – SHUT UP AND TAKE MY MONEY.
You charge for a 5Mbps connection but that is really the “max” rate and not a guaranteed rate. Then you try to prop up the rest of the infrastructure to support “actual” usage which is less than what you sold, but growing all the time.
You have taken the profits from customers using less than what they actually bought, and now when we want to actually use the whole amount we bought, you whine about it?
AT&T is double dipping, I’m paying for a contract service and that contract doesn’t stipulate what type of data / or how much of that data I’m allowed to use. AT&T only cares about one thing, it’s shareholders and are unwilling to invest in their own infrastructure, plain and simple. The only people that are going to get hurt by this is the customer.
I am sorry but this is a horrible point of view from you. If this is a representation of the company, I am afraid this is the last time I stay with AT&T.
I have long gotten rid of my cellphone plan from you guys, now it looks like I have look for a replacement for my internet needs as well.
Let me get this straight. A year or two ago Netflix has 10 million customers and everyone is happy with standard def streaming. Netflix now has 30 million customers and is streaming HD. Netflix is offering much better quality (higher value) that requires more network resources, but is not asking their customers to pay for it. They want to externalize the cost of delivery to the ISP’s. This is simply unsustainable.
Most of the comments above only make sense if bandwidth is either infinite or the cost to provide additional bandwidth is zero. Neither is true, and someone has to pay – be it Netflix, the ISP or the customer.
Most people understand that if you consume more water, electricity or gas, you pay based on your usage. Before we get to the inevitable usage-based system for ISP end-users I’d like to see the Netflix’s of the world cough up a few bucks to make the current model last a little while longer. Don’t you think HD steaming is worth a premium over SD?
So, you want to get paid to put stuff in the pipe and paid again to take it out?
The only thing AT&T innovates anymore is how to make more money while simultaneously providing less value.
Wow Jim. If AT&T would spend half as much effort enabling IPv6 as it does lobbying, it would be an industry leader.
1st of all; this is mostly your own company’s damn fault. Why? The Telecommunications Companies received large subsidies of tax pay dollars to expand their networks from the Telecommunications Act of 1996.
2nd — you sell X bandwidth per month, in some cases with bandwidth caps. Where I go to meet my monthly quota — is my own business. I want my traffic in a timely manner that I PAY FOR.
1 – EITHER MEET THE NEED you see the customer (TURBO MAX) 20mbs down U-verse with 250 gb a month …. or NOT. Don’t sell one thing…… ‘and oh yeah, need $$ from all your favorite services to meet that speed.
IT”S BS that all you want more $ to build up your networks; when you should already have done so. You’re making a killing from your wireless division – so REINVEST it in your business instead of paying yet another bonus (that you obviously don’t deserve…. use your customer service lately? I thought not)
I pay $35 a month to Att for U-Verse naked DSL. From the fine print , I get bandwidth of 5 Mbs. Why should ATT be looking into what is in my download pipe in order to distinguish my netflix download packets from my email packets? Im paying ATT to DELIVER WHATEVER PACKETS I WANT. ITS MY CHOICE – NOT ATT’S. The only reason that ATT are trying to make an issue out of Netflix is that ATT has no competition. They are a monopoly. My only other choice for broadband is Comcast. Netflix , on the other hand , competes with Itunes, with Youtube, with Cable companies, with Vimeo ….. So ATT, just tell me what you want me to pay for the bandwidth on my ATT ISP plan. I’ll use that bandwidth without you looking through the details of what packets im downloading.
Q: Why do I pay extra for a higher-bandwidth plan? A: Because I like using things like Netflix.
Your argument is like UPS saying, “darn you Amazon, your customers keep paying us for shipping. You’re clogging our trucks! Pay up!”
You should be thanking every high-bandwidth service that makes people want to increase their internet usage. PROVIDE A PIPE. THAT IS ALL.
This is a preposterous statement by AT&T and you embarrass yourself and the company in making it. The level of contempt for your customers that it shows is insulting.
The fact is that consumers do pay for bandwidth. Netflix also pays for bandwidth. You’re already double dipping.
Your problem is that you want to assess rates not by quantity but by content. It costs you no more to carry one content vs. another kind, your costs are only assessed by quantity and you already assess prices on that basis.
To use your own analogy, it’s as if the post office would inspect the contents of envelopes and charge by the content of the letter, rather by weight–even though weight is the only deciding factor in their cost of delivery.
You must think we’re pretty stupid. But if you actually win the right to charge based on content, at least one good thing will come out of it-you will lose Common Carrier status and so will be liable for the entire content of the internet that you have appointed yourselves to be guardians of. We will be able to sue you for the content, both legal and offensive, and flat out illegal, that is now the sole liability of the hosting provider.
If you decide to facilitate illegal internet traffic, you will be liable for that content.
If there were no Netflix, if AT&T’s customers were filling their pipes with data from different sources instead of one easily-identified provider, who would you expect to pay for the bandwidth used? Whoever it is, that’s the deal that all of your customers signed up for. That AT&T is now whining about Netflix is just the sort of thing that would encourage me to use one of AT&T’s competitors, if there were any.
The analogy of asking neighbors to pay mailing costs for your movie is off target. Want a better analogy? It’s not enough for the mail service (ISPs) that you are paying them monopolistic rates for delivery speeds they rarely achieve, AND paying them every day, whether you have mail or not. They notice that a lot of your mail comes from one sender, and try to blackmail that sender for additional money. If the sender won’t pay, delivery times for their stuff suffers.
We need strong net neutrality.
You guys have had years to prepare for this, you knew it was coming. You specifically did not add the necessary peering capacity to your networks. Now you basically want content companies to pay for your upgrades.
You people are in la la land.
The best analogy I can think of is fedex. In AT&T bizarro world if I’m fedex I can charge the person sending the package and the person receiving the package when things get busy and I don’t have enough drivers.
This kind of idea is completely pants on head lunacy. You people really do live in a different world than the rest of us.
Aaaaand I’m done. I’m no longer an AT&T Uverse customer (you just lost a top tier Internet and u300 subscriber). I’ll do business with a better ISP from now on. Once my cell contract expires, I’ll transfer that service from AT&T as well. I refuse to give money to an ISP that thinks they have the right to charge for some content more than others. You say unlimited Internet on my phone, yet at 5gb, you throttle it until it’s too slow to use at all. You say the same thing about my home service, but start sending me threatening emails when I exceed 250gb a month. I’m done with you and your anti-customer business practices.
Att is a joke. Your service is deplorable. Back when i had the “unlimited plan” you changed the definition of the word unlimited to mean “very limited”. If someone pays a certain amount for 2GB of data at a certain speed then what business is it of yours to tell me how i can use it? If i go one bit over my limit you are going to charge me an outrageous fee to compensate? If i use 1GB less than my monthly allowance do you plan on prorating my bill? If i use 50GB of data streaming Netflix you charge me for the overage, right? If your network can’t handle the traffic that we are ALREADY PAYING FOR then it is your fault for not upgrading your network…not your CUSTOMER (look up this word att. I think you might realize that without US you wouldn’t exist). Everything about your company, service, & brand is pathetic. I can’t wait to see the day when you actually have to compete for our business & learn to provide real value or your company folds & goes the way of the dodo. I would prefer to see the latter.
I am very sorry ISP’s, but your business is to provide users with unfettered bandwidth. You already have monopolies on your turfs and you are now blocking and throttling content not from your limited offerings and you expect us consumers to just swallow it. We WILL vote with our wallets and I for one cannot wait for Google Fiber to DEVASTATE your greedy business models!
The way I see it, no matter what someone has to pay. Be it netflix or At&t. In the end of both, either customer of one of these two will be paying the price. Does the high cost of At&t not already cover those prices, and if they say they will pay for you to have high speed internet should they not be obligated to give you that privilege, since you are already paying for their service? Netflix keeps its promise to deliver high speeds based on your bandwidth. Shouldn’t it be the ISP’s responsibility to give you that bandwidth? I believe that At&t should not be throttling those of people that watch netflix, just as it should keep its promise of a high speed delivery internet provider.
And another thing…
When I buy gasoline, I don’t get “up to 10 gallons”, I get 10 gallons if I pay for it. I NEVER get the max bandwidth that I pay for with Comcast, ATT or any other provider I’ve had. ISP’s are overbooking like airlines and dentists, and charging us full price. It is a cartel that was subsidized by many municipalities and should actually be public utilities. I say NATIONALIZE, like Hugo Chavez! Unbridled capitalism at the consumer’s expense is not always the best model for society, especially when it amounts to censorship!
http://www.newnetworks.com/ShortSCANDALSummary.htm
$200 Billion Broadband Scandal
The case is simple: Do you have a 45 Mbps, bi-directional service to your home, paying around $40? Do you have 500+ channels and can choose any competitive service? You paid an estimated $2000 for this product even though you did not receive it and it may never be available. Do you want your money back and the companies held accountable?
Background: Starting in the early 1990’s, the Clinton-Gore Administration had aggressive plans to create the “National Infrastructure Initiative” to rewire ALL of America with fiber optic wiring, replacing the 100 year old copper wire. The Bell companies — SBC, Verizon, BellSouth and Qwest, claimed that they would step up to the plate and rewire homes, schools, libraries, government agencies, businesses and hospitals, etc. if they received financial incentives.
Your US Postal Service analogy is missing the point — to make it work, lets assume the USPS has a program where I may pay a monthly fee to the USPS to have mail delivered to me without requiring postage stamps on it. While still not perfect, this analogy is closer to the ISP model we have today.
And then the Postal Service turns around and says “Hey Netflix, your customer has purchased our plan to let anyone send him things without stamps, but if you want us to deliver that DVD we’re going to go ahead and require you put a stamp on it anyway”
Mr Cicconi, I know you want to have your cake and eat it too. But Reed is right. While your arguments are in the interest of your shareholders, they are not in the interest of your customers or the public at large.
Yes, the price of postage was built into the Netflix DVD model. I’m sure $1-5 of the cost went to postage based on how frequently you turned your DVDs over. But Netflix customers pay for bandwidth today on the order of $30-65 for their internet connection. That is a hefty price for internet access. If you don’t want to provide neutral service for your customers than get out of the business and quit lobbying for regulations that prevent new players from entering your near monopolistic field.
Create tiered pricing based on consumption if you wish, but keep the internet neutral. We as consumers should pay for the things we want. You are off base to suggest it is Netflix’s responsibility to compensate for your lack of infrastructure.
The discussion on net neutrality suffers from the fact that no one seems to be willing to acknowledge the elephant in the room: this is about who is getting a share of the revenue for serving content (not bits). The Internet is not at danger.
Here is why:
If operators like AT&T would start charging extra so that consumers can access specific services, consumers would be fast to migrate elsewhere. A change in charges is a change in contract giving you away out. Who would risk that, especially in the super competitive US market?
Content providers like Netflix will have to rethink their stance in offering sponsoring access to their content, in the same way advertisers pay the Googles and Facebooks of the world to get their users visit their content.
We already live in a world where everyone enjoys advertising-funded Internet content and services (YouTube, Facebook, Google Search, Gmail, …), so the step towards subsidised internet access is smaller than many are willing to publicly acknowledge. In fact, sponsored data offerings are nothing more than another way to advertise content.
http://neoschronos.com/insights/net-neutrality-past-present-and-future/
What almost everybody has missed is that while consumers are paying for downstream bandwidth for using Netflix (or any other Internet content) the provider of that content is ALSO PAYING for their internet access as well. And paying some serious coin. Nobody is asking for a free lunch, and nobody is getting one.
So since both the sender and receiver are paying for their “right of entry” on the Internet superhighway (and working within the limits set by their contract), all that AT&T’s assertions point to is their desire to set up extra “toll booths” along the way. Much like the troll in the children’s fairy tale, AT&T needs to go back under the bridge.
PS – take a lesson from other companies that successfully use social media and if you can’t articulate your position in a way that ingraciates you to your customers, leave social media to the pros.
When I pay AT&T for access to the internet, I’m paying them for access to the whole internet. And when I pay more for a faster connection its not because I want a faster connection to servers on AT&T’s network, its because I want a faster connection to the whole internet. If you don’t want to provide me with fast links to the rest of the internet, then please let some other ISP use the cables that run in your government-given right-of-way to my house to provide me with fast access to the whole internet. And please don’t use me as some kind of negotiating chip, so that you can sell google access to me. I’m paying you already to access the whole internet, no one else should have to pay to send me back the data my web browser requests when I log into some website.
@ Max Powers
Yes, we do understand that Bandwith is limited. All too well.
But what you don’t seem to get is that the bandwidth is full because AT&T’s paying customers requested that data.
All they are trying to do is use the internet service they paid for, to access something on the internet. Whether or not its netflix is moot.
Companies like AT&T, Comcast, and Verizon in some cases have links liying dead, ready to activate, but they won’t simply flip that switch. They won’t allow Netflix to bring their network closer to you the user, in order to provide a better service, and they won’t upgrade the network that they are selling to you the customer that they are responsible for.
Instead, they’d rather say “hmm, nice internet site you’re running here. Pitty if something was to happen to it”.
Customers who buy internet should get internet. Not just the bits of the internet that are convenient to provide.
@Jeff del Rey
No.
Netflix pays their ISP to put their site on the internet.
AT&T is paid by its customers to go and get whatever they want from the internet, and bring it to them.
Why should Netflix pay AT&T to do what the end customer already paid them to do?
Your position is garbage. The customers are paying for the service and your refusing to deliver what is ALREADY paid for in monthly customer service payments. Why should you get $25-$70 and netflix gets on average from our family $7 a month. Now your garbage infrastructure is their problem? What if it wasnt one big company and 25 small ones delivering it then whats your horse feces excuse then? Your full of it and none of your shareholder speak is working on ANYONE thats reading the steaming pile.
“Netflix may now be using an Internet connection instead of the Postal Service, but the same principle applies.”
No, it doesn’t. Nobody pays the postal service a monthly fee to deliver mail to them.
Nice self-serving BS there. You were given billions in 1997 to, on your promise, “put fiber to every neighborhood in America.”
Instead you took that money and used it to buy up wireless bandwidth. Now you are whining about people using it.
You are the real thieves and pirates.
Than you, Jim, for that thoughtful and excellent piece. I’m heartened to know that some businesses and businessmen are still willing to stand up for themselves and for the right principles.
I won’t bother substantively addressing the trash that so many others have posted. Don’t pay any attention to those parasites. Know that there are others who support the right to property and voluntary contract, who know that without producers of vital technology and services like AT&T, we would still be in the Dark Ages.
Nice post, but an AT&T editorial like this is the pot calling the kettle black. Has anyone done the math on how much people pay AT&T for a few kilobytes of data when they send a text message? Or… how much they charge for data transferred via 3G or 4G? Does anyone remember Judge Green and the breakup of AT&T in 1982, after AT&T ripped off everyone for 40 or 50 years? JUDGE GREEN, WE NEED YOU BACK! It’s time to break up AT&T again!
AT&T
QUIT WHINING we pay for service regardless in multiple ways.
1) directly
2) FUSF fees that are effectively a goverment approved subsidy.
3) Tax breaks that allow AT&T to not bear their share of the cost of running this country that the rest of us have to pick up the slack for.
Netflix’s post could not be more wrong. Providers of pipe have every right to sell that pipe however they wish — because it is their property — and it is Netflix’s responsibility to negotiate the best bandwidth possible and pay whatever the pipe provider wants (and pass that on to consumers as necessary). To force neutrality by law is neo-Marxist nonsense applied to high-tech. It is legalized plunder.
First, USPS still delivers DVDs for Netflix.
Not as many as it used to, but I wouldn’t be surprised if my people watch movies on DVD than through AT&T’s U Verse service which uses public right of way and builds boxes on public sidewalks (more on that later).
And I have a feeling the amount Netflix pays to USPS doesn’t cover the cost or delivering all those DVDs. So we the taxpayers who don’t get DVDs from Netflix (anymore) do pay for that shortfall in increased postage and our taxes.
Also, most of will never subscribe to U Verse (probably even fewer after your post).
But you are using public resources to wire for it. And blocking public sidewalks with your ugly boxes.
I also assume you are losing money on it. So one reason my AT&T iPhone bill is so outrageous is to make up for those losses.
And one major reason people buy iPhones and iPads with AT&T service (though I got my iPad with Verizon because my experience with AT&T has been so bad) and other phones and tablets is to watch Netflix.
So you profit from it too
If you want to talk about “how every other form of commerce works in this country,” let’s consider the customer-service provider paradigm for ISPs. Customers pay a fee per month to gain access to the internet within a range of connection speeds, and NOWHERE does the ISP dictate importance or priority of one data packet over another!
If AT&T chooses to cherry-pick which data packets are to be prioritized, then you are violating the written understanding between customer and service provider and therefore not observing “how every other form of commerce works in this country,” by honoring the agreement between customer and service provider.
I’ve had it with this terrible company, monopolizing and pushing everyone else around, so you don’t have to get up and innovate or do anything about your aging infrastructure.
You just lost a lifelong U-Verse customer today.
Netflix doesn’t just deliver increased traffic to your network AT WILL. YOUR customers are downloading it at the stated speed YOU sold to them! The fractional selling of your bandwidth has caught up to you. Netflix should tell you to get lost.
Old school thinking… In the old public switched telephone network days telcos could safely build less infrastructure than they sold. If I wanted to call from Los Angeles to San Francisco I usually could. AT&T did not have enough trunks for everybody in Los Angeles to call someone in San Francisco at the same time, but that never happened, so AT&T could safely have infrastructure for only a fraction of the theoretical maximum possible number of calls between Los Angeles and San Francisco based on the number of phones in the two cities. If for some reason everybody in Los Angeles decided to call somebody in San Francisco at the same time most of the callers would get an ‘all circuits busy’ recording. In the new internet world every subscriber will be using all the bandwidth she is paying for all the time. This means that in order to properly service their customers, ISPs will have to build enough infrastructure for every one of their subscribers to run at their contracted bandwidth all the time. This is so different from the old way of doing things that content providers, ISPs and consumers will have to rethink and renegotiate their business models from scratch. Mr. Cicconi’s post, for all its logical flaws, is a useful first step in that process.
We don”t ask Toyota or GM to pay for the roads, why should Netflix pay for the pipes?
“ATT. Where strangling innovation is priority #1!”
Brett Glass,
Your analogy is as flawed as Cicconi’s. You aren’t paying UPS for the streets that are already paid for by you, the taxpayer. You are paying UPS for delivery.
Imagine if UPS were like AT&T and sold you “up to” 100 next-day deliveries for a monthly charge, and then tried to charge Amazon for the mere privilege of being able to deliver to you, a UPS customer, who has already paid a high price to UPS for said deliveries.
Dear Sir,
The answer to your question “Who should pay for Netflix” is the customers already do we pay you to provide data services to our homes how we use those services is none of your business.
This blog post is embarrassing. The analogy regarding the mail is so wrong it’s laughable. I don’t pay for my Mail to get delivered. I do however pay to get my internet delivered. I pay what is arguably a significant amount if money for a subpar service. What’s to prevent these ISPs from charging any company to provide content to me that I am already paying for? This isn’t market driven this is greed at its best. I’m ashamed to be an ATT customer.
“As we all know, there is no free lunch” …unless you are AT&T.
It is wonderful to read the thoughtful comments above. I agree that AT$T contracted with me to provide access and should not be charging content providers for priority access to AT$T networks to send packets I have requested. Further, AT$T should not be picking winners and losers all content providers (websites) should have equal access. I’m a very long term AT$T subscriber, I have 4 iPhones under my family plan and I am a shareholder of southwest bell which became AT&T. I am a strong supporter of internet neutrality. The positions taken by Cicconi are horrible.
Isn’t this the same guy that failed and was ridiculed by DOJ and FCC when he tried to pitch AT&T’s reasons for acquiring T-Mobile. The same guy that stands in front of the FAA and argues AT&T’s corporate jet fleet of airplanes shouldn’t pay more for air traffic control, that cost should only be born by the airlines. He tries to lump their fleet of jets in with a Cessna 152. We pay our rate for pretty abysmal service. 31 Globally (Speedtest rankings). If AT&T’s network can not handle the traffic at the speeds I pay for, then refund me some money. Don’t hold your cup out at the street corner and beg for money Jim.
I think the idea of Tier 1 ISPs charging companies that originate heavy traffic destined for the ISPs customers is a bad one. Why not handle this accounting at our network peering points? Isn’t that where settlements are supposed to occur? If one peer consistently delivers higher traffic to a peer, shouldn’t the former pay settlements to the latter for this? For example, if Netflix buys its transport from ISP “A” and ISP A peers with ISP “B” and ISP A finds it must pay millions in settlement fees to ISP B because it is delivering traffic to ISP B at a ratio of 5 to 1, wouldn’t ISP A want to recoup those settlement fees from their customer, Netflix?
Spoken like a true politician. The bottom line is that the consumer, once again, is the one who suffers. We already pay high prices for the “privilege” of purchasing your services. Then, you want us to pay more, whether it be via higher prices for service or through what will eventually be higher prices from entertainment providers (such as Netflix) also. Am I missing something in this long, bloated, heavily inaccurate puff of smoke? I am sorry, however, if the point of this post was to prop up some support or get sympathy from the public, you greatly underestimated the intelligence of the average consumer. I know you think we are all moronic sheep, yet we continue to prove that we still have the ability to think for ourselves. Shame on you Mr. Cicconi.
1. For a consumer, he would have to pay AT&T to have broadband service to his home.
2. For a business, if he wants to connect to AT&T network, he also has to pay according to pipe size.
3. For all AT&T customers, regardless consumer or business, they have expectation that traffics among them shall flow reasonable well.
4. Now Netflix can connect to AT&T network and demands AT&T provides reasonable good data flow to Netflix and Netflix customers as a paying customer of AT&T.
5. Of course, Netflix as a cheapo shops around for a cheap network connection than AT&T ask for. Assume provider X gives Netflix 50% of what AT&T asks. Good deals to Netflix.
6. But there is no free lunch. Now provider X need to pay AT&T for the larger pipe to AT&T network to serve Netflix traffic.
7. But, but, provider X does not want to pay, neither.
8. Surprise, surprise, the Netflix is crying uncle to Uncle Sam now.
Network access, delivery, management, provisioning, maintenance and repair is a ‘Service’…. last time I checked. Distribution of entertainment is also a service, which relies heavily on a strong distribution platform (mail, internet, or whatever is chosen). I am confuse why one service provider would expect another service provider to provide their services for free? Sounds to me like Netflix has a distribution process to pay for with a very weak strategy regarding how to support it. Its a shame the leadership within the organization has to blame ineffective decision making on someone else, or they can figure out how to finance the construction of a Global network access and content delivery platform. Not sure how much more simplistic this can be? I mean, I would love to point the finger at my car manufactured and tell them I want all of my oil, tire, battery, transmission, windshield and mechanical repairs and maintenance for free on my taxi because my customer’s should not have to pay for it…. but any basic business education should include the basic equation of ‘Cost of Goods Sold’… or is Netflix run by a bunch of next generation freeloaders who want everything for free ony to sell it for a profit? But wait, that would require negotiation skills…. oh this is just too much work… lets blame our suppliers first and see if the government will force them to give it to us for free.
I pay ATT for a 25Mb/s internet connection. I should be able to bring any type of data I want down that pipe from what ever source. As long as that data gets to the perimeter of the ATT network at an appropriate speed, ATT should provided it to me at 25Mb/s If the ATT backend does not support a typical speed of 25Mb/s, they should not claim and contract with me for a 25Mb/s service but should advertise it for what it really is.
Since Jim Cicconi bases his arguments on what he claims is the historical norms for his industry, he should keep in mind that the telecom industry traditionally built out the network sufficiently to support the ‘busy hour’. The ‘busy hour’ is that time of day when the network is typically the most stressed on a regular basis. The network would support calls and data getting through during those times. Only occasionally during a particularly heavy event such as Mother’s Day (which used to be the heaviest long distance calling day of the year) would the network become overloaded.
Now Jim Cicconi wants a new non-traditional model where anyone or any company that uses anywhere close to the advertised capability of their service should pay extra.
Jim Cicconi’s Netflix DVD example does not hold water either. In the case of Netflix DVD rentals, the customer did pay Netflix for delivery since the customer was not paying anyone else to deliver those DVDs. Now though, I am already paying ATT handsomely to deliver me the videos provided to them by Netflix. Jim Ciccone seems to want a business model where his customers pay him to provide a delivery service and where the companies that provide the product also pay him to provide the delivery service.
I am so sorry that Jim has not been able to have his cake and eat it too. Perhaps if he wants content providers to pay for delivery of their content, he should stop charging me that relatively high monthly bill for that same delivery.
Jim, your stance applies in this situation.
Where it does not apply (and where AT&T begins contradicting itself) is when cable consumers (like AT&T) have to subsidize hundreds of cable channels that they “couldn’t care less about”.
Also, ISP’s are already doing what you propose, by offering different internet speed packages. My neighbor can pay less for the lower tier if she wants to, and probably can’t stream Netlfix via it.
Brian
Jim Cicconi is delusional. I already pay my ISP for Internet bandwidth. They in turn pay their upstream provider (on a metered rate likely). Netflix also pays for bandwidth from, likely, a number of providers. Why should anyone pay a second time for this traffic? If it’s costing AT&T too much, then they need to raise their rates for all of their network customers to cover those costs or find other ways to cut their expenses.
Riiiight. So, what you’re saying is that I as an ATT subscriber paying for unlimited, or limited access, must also have the party I want to contact/connect pay you as well.
In this case since the party is a business, and they’ll pass the cost to me the consumer, so you’re in effect charging me twice for something I already paid for… Great job.
You have a very perverse, or different idea, of the services you sell and what it means to subscribe them.
As a customer, I am already paying you for access– if you cannot provide access because your network is not equipped to do so that’s a business problem, not a customer problem.
Didn’t you take capitalism one-oh-one? you don’t like the market you entered so you want to change the market? It doesn’t provide the margins it once did because the internet is moving from commodity to utility. Get over it and innovate.
This blog post is nothing but a fart in the wind… the wishes of the few disillusioned people at the top for a marginal increase in profit, at the cost of the freedom of information (i.e. the internet) will not be tolerated.
No people are that stupid. No world that ignorant. Continue to waste your dollars in futility… when this is all said and done I hope the stockholders fire you for the egregious waste of their investment capital and their time.
Wow… Jim Cicconi you REALLY show your own arrogance here, this reads like someone who gets his information from Fox news!
Please stop writing blog posts, it makes AT&T as a company look stupider each time you open your (metaphorical) mouth on the web.
As a customer it annoys me to no end you want to get double paid (after all, what the hell am I already paying for!), AND you make a fool of yourself and your company by speaking without any real idea of just how your own business works on the technical level!
This is typical AT&T rhetoric and should come as no surprise that they oversell their services and then expect someone to bail them out. They did they same thing when the iPhone came out. They sold “unlimited” data plans to iPhone customers for a hefty fee and then blamed the same customers for using “too much” “unlimited” data and overloading their network. AT&T is collecting money from its customers with the promise of delivering “high speed” internet access and when the customers actually take them up on that promise, AT&T cries foul and wants Netflix to foot the bill. Let me give Mr. Cicconi a clue, since he obviously doesn’t have one… If you can’t deliver a service, then don’t advertise it and don’t accept money for it. Stop trying to double-dip and just deliver the services you promised.
I’m reading this as AT&T trying to get someone else to shoulder the costs of their business so that they can keep more of their price-gouging profits in their overpaid executives’ pockets instead of actually investing in their infrastructure the way they’re supposed to.
I would like to introduce Mr. Cicconi to a device called a ‘Telephone’, particularly a variant colloquially termed a ‘landline’. 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.
J.T., your argument shows a clear lack of understanding about how the internet works in the first place. What AT&T is trying to do is basically double-dip and get money not only from their customers (who already have an agreement with AT&T to receive a certain amount of bandwidth at a certain speed), but also from the source of that data. That would be like Fedex asking for postage not only from the person sending the package, but also from the person receiving the package, because “is the person receiving that package paying fedex money? No? Then why should we deliver the package for free?” You’re NOT delivering the package for free, you’ve ALREADY BEEN PAID BY THE SENDER FOR THE COST OF SHIPPING THAT PACKAGE.
It seems to me the ‘caller pays’ model is what Netflix is advocating. It is the consumer who places the ‘call’ by requesting to view a movie. The consumer pays in bandwidth tiers for the privledge (or at least I do, but I’m not on ATT). Netflix pays plenty to be able to stream the content and deliver it to the ATT edge, so they are by no means getting a free ride. Nothing new that I can see in this model, it is how landline has worked in my lifetime.
What I believe would be new and extremely arrogant for ATT to expect (assuming this is in fact what ATT is angling for), is a two ended buisness model where a consumers network bandwidth provider uses knowledge of what services (as opposed to raw bandwidth) the consumer accesses and attempts to rent seek on the service provider business model.
As long as the FCC prevents rent seeking (even by means other than strict neutrality such as requiring cost plus wholesale pricing of bandwidth on the interconnect side) I will be satisfed that the FCC is protecting consumers and content providers from unjustified intrusion and rent seeking by ISPs. That, for me, is the nut of the issue and if ATT can propose rules that address rent seeking I’ll be happy to express my support – but I’m not holding my breath.
And yet I’m leaving AT&T’s 18 meg plan to go to Google Fiber’s 5 meg plan… This is why. If you wanted to keep me as a customer, you would work to make sure that your product is more appealing to customers by working with content providers like Netflix… like Google does.
You are a criminal, Jim Cicconi. Nothing but a conman
Excuse you?
You’re being paid by HOW MANY thousands or millions of subscribers TO DELIVER CONTENT THEY REQUEST FROM THE INTERNET?
Why the hell should you be allowed to double-dip or hamstring a content provider? THAT IS NOT WHAT WE ARE PAYING YOU FOR!
Netflix isn’t randomly bombarding your network with pointless traffic. YOUR CUSTOMERS are requesting traffic from the Netflix service.
But no, you, Comcast, Time Warner and all these other oversized monopoly providers aren’t satisfied with the millions/billions you’re already reaping. Or the millions/billions in incentives you took and squandered from the government years back to provide true broadband. So now we’re stuck with you idiots and some pathetic single-digit megabit connections and bandwidth caps because you were more interested in paying bonuses than building a robust, future-proof network for your clients.
I have zero sympathy or support for you grasping, kleptocratic scumbags and your ludicrous demands.
Stop screwing around and voting yourselves unearned bonuses and start investing in your infrastructure you idiots.
So with postage DVD situation Netflix pays postal services with money that the client gave it for postage. Here we have Internet, where you pay INTERNET SERVICE PROVIDERS (to remind you of the meaning of the ISP abbreviation) to deliver digital data. So, basically, you pay for the postage yourself, instead of giving money to Netflix for that.
The ISP client pays for digital content measured in millions of bits (so it’s only 1 or 0) per second. A monthly subscription means that a client pays 60*60*60*24*30=155520000 seconds worth of the digital content at the given quantity AT LEAST. That means that a single second of network delay means that the client can and should refuse to pay, since subscription contract was not fulfilled by the ISP side.
I repeat: an ISP client pays per millions of bits per second. Every single second is paid.
And we somehow tolerate years of capping.
I don’t think you did a very good job at convincing anyone of your position. If anything, it seems that virtually everyone here is siding with Netflix.
Both sides are already paying for internet connection. Netflix pays for their bandwidth already. And customers are already paying for their internet connection. Furthermore, if AT&T were losing money, that would be one thing, but AT&T is already posting MASSIVE profits. Why don’t you spend some of that money that customers are paying you to actually upgrade your network and give people WHAT THEY ALREADY PAID FOR!
You have it all wrong. This is not about Netflix and AT&T. This is about AT&T and the customer. You are not upholding your end of the agreement.
“Electrons cost money!!!” – AT&T
Jim Cicconi, ISPs will pay. Why you might ask? Well, you see people already pay you every month! Yes, I know it might be a surprise, but people pay AT&T for a promised bandwidth. It does not matter if it is Netflix or anything else. That is not the subscribers problem. It does not matter. All we are paying for 1&0s.
This is horrible. I’m a long time ATT customer, but if I find myself in the position of paying twice for a single service like access to internet services because of ATT, I may not be much longer.
I already paid you for it. Netflix pays it’s ISP, I pay mine. Your job is to delivery me the bytes I ask for as quickly as possible.
This attitude is really disgusting. Netflix is not asking for a “free lunch.” Your customers are asking for the service they ostensibly pay you for.
All of your customers are very familiar with the incompetence at the consumer-facing level of your organization. Sad to see it extends all the way to the top.
Hey buddy: Netflix isn’t asking for a free lunch. In fact, both Netflix and I pay for our internet connections.
Your arrogance is astounding, and I sincerely hope ISPs get reclassified as common carriers.
Either Jim is very ignorant or is purposefully being misleading in order to bring in more revenue. I’m 95% sure it’s the latter. AT&T’s customers pay for their internet access! However, the ISPs smell blood because of the government’s inability to pass net neutrality legislation. Now that the precedent is set with Comcast the ISPs can begin their extortion with every website on the internet! Also, it’s not physically possible for their to be many competitive ISPs in a single geographic area so they have a near monopoly. These are mafia-like tactics. It’s disgusting.
Yet another reason why I’m happy to have cancelled all services with AT&T. Free flowing internet is what drives innovation and what made Netflix possible in the first place.
If it starts with Netflix who’s to say where it will stop? Is AT&T going to start charing extra to send emails? The point is that the very same rationale used to argue that Netflix should pay could be applied to anything you currently do for free online. People pay their ISPs for a connection and that’s enough — too much in most cases.
Cicconi uses an example of the USPS, asking why should neighbors subsidize the delivery of my movies. Well, dude, our neighbors do already subsidize the USPS — with their tax dollars! It’s a service everyone already pays for, whether they use it a lot or a little, and it can only exist because some people use it more than others, even if some people don’t use it at all. Like the USPS, AT&T has the choice to raise the price of stamps if they need to.
Lame.
This is a classic shakedown. Your creative comparisons don’t hold any water. “it’s unfair”. boo hoo.. you should be ashamed of yourself to have such little regard for the intelligence of your customers. I’m canceling my AT&T contract.
WTF is this garbage, AT&T. You should be paying netflix – because without them, your network is less valuable. Not the other way around.
I hope this gets you guys broken up for the monopolistic activity that you are explicitly performing.
Mr. Cicconi, Do you realize that Netflix is already paying for this access? They have servers hosting the data, connected to an ISP, who they pay, to get their data onto the internet. Your retail customers pay you as an ISP for a set amount of data – if you can’t provide what you’ve promised them due to poor planning or poor estimates of actual usage, that’s your problem, not Netflix’s. Stop this PR campaign to try to double dip for service that’s already being paid for!
Hey Cicconi, Have you heard of Virgin Mobile? Cause I have! I pay for a service which provides me with the ability to view web content, netflix, etc. You requesting money from another party to ensure its delivery of a service I also pay for is not good business… it is extortion. If your business can’t provide me with the content I wish to pay for then I will take my business somewhere else. Also, It appears that you wish to auction me off as a customer ensuring greater gains from every crevice of the net. I pay you for my access not my content and don’t agree with your shifty business practices. I will be happy to terminate my contract and inform my family and social network about your moral ineptitude.
Your disconnect with rational thought is astounding, Mr Cicconi. The people pay your company for services rendered. You aren’t doing it. It’s not a ‘free lunch’ when you pay for the meal and delivery. USPS is a tax-based entity. You may not know that because you haven’t paid taxes in sometime, i guess.
The only arguments I see people making against Netflix here are strawmen, trying to conflate their business with an entirely disparate business.
GET A CLUE AT&T. Expanding your infrastructure is the cost you incur running your business. The only way you can get away with shirking the cost off on consumers is by conspiring with your so-called competitors.
I’d advise telcoms to spend heavily on lobbying this, because the only way they get their way is through nefarious shenanigans.
Need for bandwidth increases so increase your bandwidth capabilities. It’s the cost of doing business and it’s your cost to bear. If you don’t want to spend money to make money, let another ISP do it and take away your customers. Uh-oh, did I just suggest competition?
I’d rather have no internet than AT&T, esp based on my recent experience where you unable to transfer a cell phone and U-verse was always crashing.
Your customers are paying for a connection to whoever you want and you need to figure out how to make that cost effective for yourself and competitive in the price.
People aren’t going to stand for this and somebody WILL offer a connection without strings and when it happens you’ll lose more customers.
AT&T’s last great moment was when they had the IPHONE exclusively.
Jim, you’re obviously paid to push a certain agenda, but man did you miss the mark or what?
If you succeed in obtaining this new and undeserved revenue stream, I’m defecting to Internet 2.
Thank you for reassuring me that I will never switch to AT&T for my internet service. You just don’t get it, Jim. And preaching your nonsense from the heights just shows all us out here on the customer side of things where we rank. You don’t get the internet, and you don’t get providing value to customers!
This is “double-dipping” plain and simple. The cost is being paid for by every consumer to their ISP. Regardless of were the data originates; they have paid for it to be delivered. If an ISP can’t handle their bandwidth obligations then it should not be allowed to enter into an agreement stating it can, nor promote that it can.
FTFY: “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. Cicconi’s arrogant proposition is that I should pay that cost AND Netflix should pay that cost. 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.”
In other words, Mr. Cicconi is complaining that if HIS (AT&T’s) customer’s are utilizing the network access HE has sold and advertised & that HIS CUSTOMER’S have PAID for, that someone else should pay him to maintain and upgrade HIS networks. Netflix pays their ISP, I pay mine, this is the way the internet has always worked. Mr. C needs to stop prevaricating.
Jim you just don’t get it do you. Im glad that im not at AT&T anymore, and by the looks of this you are not very popular with this blog based on you’re ignorance of understanding but he your push youre agenda so: good boy here is a cooky
So it’s AT&T’s position that it can’t meet its customers’ demands? Good to know.
And instead of capitalizing on this demand (i.e. competing with other ISP’s that are currently lodging the same complaints while throttling the speed of content from Netflix) by providing better service, they’ve decided to just complain that in order to deliver what their customers want, everyone should subsidize AT&T’s necessary growth. Nice work if you can get it.
Dear AT&T,
I’m am about to tell you something that should not, but I fear will, come as a surprise. I do not give you money every month for the privilege of having an AT&T pipe coming into my house. I pay you to have access to the whole of the Internet, including Netflix. I pay you to have access to the bytes of data I find interesting. I pay you to be able to access each and every one of those bytes in the fastest, most efficient way possible. You ask pays for you to let Netflix flow freely through your network; the answer is me. I pay for it, and the day you stop letting me access the information I want in the manner I want is the day I stop paying you.
Technology can deliver data to people’s homes at speeds which no one would even need to care about bandwidth for a long time. It would be like delivering the potential of a Mississippi river of data to a person’s home, while any video service, including Netflix, could easily ride in on small stream. In other words, there would be more bandwidth than you could use, and plenty for new potential. After all, technology is far from it’s peak. 15 years ago, you could get by with dial-up and take advantage with almost everything the net had to offer, today dial-up is useless.
Yet ATT want’s the net to be like Disneyland, once they got you trapped inside, they can just gouge the heck out of you on everything else.
They don’t want you to have lightning fast connection, they want to milk your wallet dry with crappy, low-speed, non-open junk service.
I’m completely supportive of letting municipalities form their own Fiber system.
Netflix pays their internet bills, I pay mine– who is getting a “free ride”, exactly?
Quit opposing net neutrality by complaining that people are actually USING THE SERVICE THEY PAY FOR!
This reminds me of AT&T’s bitching in 2011 that iPhone users were using too much data (boo hoo!) and that you’d start throttling them! If people’s use of your services is cutting into your profit margins, maybe you should hang it up and let us all get municipal fiber.
This is where your entire argument is broken:
“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.”
If this was the same analogy, the customer already pays for a certain amount of deliveries (mb/s). It should not matter who or where they came from. The customer already paid for the deliveries! Plus the items which came in the packages (Netflix in this case).
Stop double-charging! If you can’t support the sustained rates which you are selling your customers, then FIX YOUR MODEL! This is a very slippery slope.
Netflix pays to deliver content to the AT&T network (which is built into the cost of the Netflix service) and I pay AT&T to deliver whatever internet traffic I request to me at the speed I signed up for. It seems pretty clear that Netflix isn’t looking for a free ride, but AT&T wants to double dip by getting paid on both ends.
The analogy to Netflix’s DVD business is flawed. Shipping services (post office, UPS, FedEx) do not collect fees from both the shipper and the recipient.
If AT&T legitimately needs to raise prices in order to satisfy customer demand for increased service, then so be it, but don’t shift blame. If it weren’t for Netflix, people wouldn’t be signing up for more expensive tiers of high speed access to begin with, because basic DSL speeds are fine for just about everything else. When I see that AT&T made $7bn profit last quarter, I have a hard time believing that the motivation behind this response is anything but greed.
The title of this nonsense reads: WHO SHOULD PAY FOR NETFLIX? Really?!!!!
Your customers already paid for access to internet, so how about you give them what they paid for! Greedy bastards! Wanted to say you should be ashamed………probably don’t know what that is….
As a longtime AT&T customer, I say this is a load of bull! Mr. Cicconi wants Netflix to pay him again for what I’ve already him paid for. DON’T MESS WITH NET NEUTRALITY!
Just wait until they’re forcing subscribers to (double-)pay ‘excess-demand insurance’ or similar to avoid having their access suddenly crippled by automatic throttling.
Now as I write this, it occurs to me that that’s probably already going around, in fact if not in name. Depressing.
If I am paying my ISP for service then am I not paying for netflix? Why should ATT charge both of us?
Dear Mr. Cicconi,
Please leave the analysis of how the internet works to people who actually understand the subject. Your company is paid by consumers to provide a specific bandwidth to it’s customers. A bandwidth, I might add, that a simple speed test shows is rarely met. Work on providing what your customers pay for and don’t worry about what the adults in the room are discussing.
Regards,
Reality.
So AT&T wants to charge Netflix for the additional bandwidth usage. Does this mean the cost for my high usage plan will come down, or that AT&T will simply line their pockets? If AT&T is adopting a pay for use posture does that mean I will get a monthly refund for the fact that I pay for 50 megs but only get 30 because of the lousy infrastructure? AT&T is already being compensated through their higher tiered bandwidth programs that they market on the back of improved access to services like Netflix. The idea that AT&T is being burdened is something you might be able to sell to a 70 year old congressman who thinks a tablet is the device on which the ten commandments were written, but not to your customers. If I were AT&T, I would be more worried about the latter.
*I* pay AT&T to deliver Netflix, that’s already been established when I got internet access from AT&T. I don’t recall negotiating that services you don’t like wouldn’t be included or given sub-standard access.
Mr. Cicconi. I pay for 15Mb down / 1Mb up for access to the internet. Last I checked, Netflix is on the internet.
I already pay a good chunk of money to have AT&T U-verse deliver Netflix to me. Do not charge Netflix or me any more. The price of technology is coming down every year I find it hard to believe that can’t deliver faster service for a lower price.
If you can’t deliver the services, that is your problem.
people at home are paying for service from you, it your job to deliver it, not tell them how they can use it, or tell who or what they are using it on to pay you as well.
By the way, Netflixs ISP (and yes they do have a ISP this is how the internet works)who ever they are, since its through amazon servers, doesn’t seem to be complaining and they are doing the heavy lifting aka the upload.
Let me see if I got this right, Mr. Cicconi… in 1996 your industry accepted $200 Billion from US taxpayers to upgrade your infrastructure to all high speed fiber-optic connections which could EASILY handle this netflix traffic. Instead of using that money to upgrade said infrastructure, you payed it out as bonuses and dividends, thereby defrauding the taxpayers. Now that the demand is exceeding your outdated infrastructure you are looking for another bailout, this time from netflix, which given past actions, you will probably blow on bonuses and dividends instead of using to upgrade your infrastructure.
Is this correct? http://www.newnetworks.com/ShortSCANDALSummary.htm
How about this: you can charge netflix a fee to carry their data, but you have to pay back the $200 Billion which you stole from the US taxpayers. Also, since you are charging netflix to carry their data, then you no longer need to charge your customers to deliver said data to them.
You make some excellent points, Mr. Cicconi. So,
1) pay back the $200 Billion you stole from the American taxpayers
2) stop trying to charge twice to deliver one set of data
3) next time think before you shoot off your mouth
AT&T is already being paid to deliver NetFlix content and NetFlix is already paying to be connected via their ISP. AT&T’s job is to connect the two parties in accordance existing terms of service. If current pricing models coupled with increasing demand make that impractical from a cost standpoint, then AT&T should simply raise prices for both consumers and businesses like NetFlix. That would be the most transparent way of solving the problem. Of course, it would not allow AT&T to pit NetFlix against another content provider in a bidding war for reliable network service, which is AT&T’s real goal here not simply funding network expansion.
The “additional bandwidth” being delivered is already being paid for, since no provider will deliver more than they are contracted to deliver. The consumers are already paying for the bandwidth. The providers are simply unprepared for the demand created by consumers using more of what they already pay for.
Jim,
You would not have a business model without content providers. The only reason I have a and PAY for a 15mb download connection is to access CONTENT. Content whether its in the form of email attachments, or content from the likes of Netflix.
I am paying for the privilege of pulling content through your pipe. Now you want to simultaneously charge Netflix for providing what I pull.
My agreement is to pull 15MB down anytime I want from anywhere I want. Period.
THANK YOU Nathan Robinson! I was heading over to this site to add just such a comment. The fleecing of the taxpayers by AT&T and other communications companies is a totally overlooked and massively criminal piece of American corporate history. Furthermore, I get that this guy has a vested interest in his company earning as much as possible, but I find it hard to believe that this interest has prevented him from understanding the fundamentals of network neutrality all the way up to today – we’ve been talking about it for years now. This would be like a mall suddenly charging admission to the most popular store in the mall, or raising the rent of only that store. It’s not a complicated journey to seeing how greedy, unfair, and hateful anti net neutrality policies are.
The lack of intelligence that you display in this subject area is impressive considering the position that you hold. Now let me get back to making pizza for ten dollars an hour.
AT&T to Netflix: If you don’t bribe us to do our job, you’re asking for a ‘free lunch’
AT&T to customers: If you are a Netflix customer then you are not our customer, and you have to pay us more anyway.
Dude you are the pipe. Don’t forget that. That is your utility to the user. I have been an AT&T customer for 20 years. Your reach is exceeding you grasp on this issue. and if you wake that people it will not go well for AT&T (regulation, 40% profits vs 90+) Just deliver the bits
If anything, it should be NETFLIX telling AT&T to pay up or they’ll block AT&T users from their service. That would be a great reason to leave AT&T for… say… Charter or HughesNet. Right now, I pay $46 a month for 6MB service. Charter can provide 30 to 50MB for -less-. Tell me why I should stay with AT&T again? Maybe it’s time to explore other options since the guy in charge of AT&T can’t see fit to provide proper service or give customers what they want.
It’s like the water company saying I can only make lemonade and not tea. I pay for the service. I should be able to do what _I_ want with it.
Just like the state and county build roads with property taxes, it’s AT&T’s job to provide the bandwidth. WE pay for it with our monthly bill. Not AT&T.
EJ — off to check out deals at Charter.
You sir are the reason for the need of a Eugenics program…
Oh, that’s a great idea. Rather than charging your customers for delivering content, you could instead charge the content providers, that way you could provide everyone with free internet access. (Just like USPS doesn’t charge you for receiving a DVD from Netflix since it already charges Netflix for the delivery.)
Somehow I think AT&T’s intention is instead to charge both the sender and the receiver. Because why not get paid for the same thing twice if you can get away with it?
If you own the pipes, you’re a common carrier.
http://thedigitalfirehose.blogspot.com/2010/12/net-neutrality-is-ruse.html
Consider all the freebie easements you get. Consider all the money you pocketed from the subsidies granted to you in the 1990s.
You’re a common carrier. Live with it.
Mr Cicconi, has AT&T joined Netflix’s Open Connect program?
In the unlikely event that you don’t know about Open Connect, that’s where Netflix provides your company an expanded infrastructure to help take the load off your servers. Netflix provides the equipment, its installation, and its maintenance and upkeep for FREE to AT&T data centers.
Open Connect servers cache Netflix’s most popular content locally so that it doesn’t have far to travel to reach AT&T customers. This improves service to AT&T’s Netflix customers as well as reducing traffic on AT&T’s network.
What’s that, Mr. Cicconi? Neither AT&T nor Comcast nor TW nor *any* of the major ISPs have accepted Netflix’s offer? Why is that? Could you all be colluding to destroy Netflix in favor of pushing your own little closed content contracts?
looks like people are onto you AT&T … don’t try to fool your customers because they know you are screwing them over – listen carefully
The answer.. ISP’s charge content providers the amount required to cover there costs + a bit, including peering costs between ISP’s.
ISP’s charge the consumer for X bandwidth / X gig pm, suitable to cover costs + a bit.
They all make a profit.
Oh sorry, that’s how it works already !
Your Postal Service analogy works only if you follow it through to its logical end, which you didn’t. USPS provided the “bandwidth” for those DVDs to be mailed regardless, and didn’t ask either the sender or to pay for hiring more postal workers. Their job is to deliver mail no matter the source. Yours is to deliver content at the speeds paid for by your customers, no matter the source.
I am canceling my AT&T accounts. Not only have you doubled my landline phone rates in the last 5 years, but your callers constantly barrage me with U-Verse ‘upgrade’ offers even though I tell them to stop calling because U-Verse is half the speed of Comcast here.
Now you want to charge extra for particular web sites and services? What next, a tax on all products purchased via *your* network?
So, the real question is why you are so adamant about suppressing consumer choice in ISP options? As well as keeping dl and up speed artificially deflated?
Your Netflix DVD via USPS example would only be accurate if the USPS charged me 53.99 a month for unlimited, or possibly a “capped” number of high speed deliveries a month. For this fee anyone could drop off a package addressed to me at any USPS post office with no postage paid, and it would be delivered to me. Then the USPS after seeing how many packages were being sent from Netflix decided to continue to let everyone else deliver to me for free (as in I already pay for the service), but will charge netflix for a custom sorting facility which netflix must pay to build and maintain.
I was on the fence about moving back to AT&T, because you had a fiber offering in my area, but honestly this type of brain-damaged idiocracy is going to keep me where I am for now, and I don’t see myself purchasing AT&T products until you’re no longer an AT&T employee and AT&T reverses their idiotic stance.
Explain to my why, when I purchase internet service, I pay for a ‘tier’ of access that allocates me a certain bandwidth, and yet IN ADDITION to paying for that level of capacity, you think it’s appropriate for me to pay an additional fee to ensure I get the bandwidth THAT I ALREADY PAID FOR???
I can’t believe anyone with enough intelligence to pass high school would suggest that not only am I not paying for the usage I paid for, but that I need to pay for it TWICE?
The only people that make such assertions are criminals.
Ladies and Gentlemen,
Let’s not be so harsh on Mr. Cicconi. Sure AT&T made $5.2 Billion dollars in profits during the last quarter of 2013 (yes, profits, as in after costs… in 3 months), but they know that it is their subscribers that would have to bear the cost of upgrades. Upgrades and maintenance aren’t free. AT&T would love for everyone to live in a fairy world where increased demand magically made those lines run themselves, but we don’t. Mr. Cicconi knows that his company has 5.2 Billion reasons not to provide those upgrades themselves. So, it must fall to Netflix, because we all know that if a delivery company uses a bridge, that company is solely responsible for upgrades to said bridge, no matter what is crossing.
(Between the lines, “Save us Google, you’re our only hope!”)
I pay my isp to send/receive data. My ISP is ATT as it happens. I pay you quite a lot – Netflix pays its ISP to send and receive data.
But you want to charge them too?
What about my website? Want to charge me for that any time someone looks at it over ATT? Hulu?
Is this concept really too complicated for people?
It comes down to greed.
Perhaps you will listen with my loss of custom. I will not use you anymore. I hope many others follow.
Your practise disgusts me.
http://theweek.com/article/index/257404/why-is-american-internet-so-slow
This article goes to show just how little the ATT and other telcom companies really care for another other than their own pocket books. This problem does not exist in other nations.
The proof is in the pudding – ATT and others are a territorial monopoly which is not forced to compete and does not foster any type of competition so they can sit back on there same bad infrastructure because no one can push them out of the game.
IF ATT REFUSES TO CONNECT ME TO CONTENT, I WILL LET MY MONEY SPEAK AND SWITCH SERVICE PROVIDERS. ATT – YOURE FIRED!
I cannot wait to see the repercussions of such an idiotic blog post. Who do you think you are fooling? If I pay you for a internet plan with an advertised connection speed, I better get it. If I don’t, you should be responsible for paying me for what you did not deliver. The fact that you can support the bandwidth if Netflix were paying you makes your infrastructure argument completely void. Deliver what your customers are paying for without prejudice, or suffer the consequences of losing those customers.
Or you could just cut off Netflix, Facebook, and everyone else who isn’t paying you money to deliver their content to people’s data devices, but then people will start to wonder why in the heck they are paying you $70 a month and then probably stop. With your reputation for being slow and overpriced, you’re half way there. Unlike Netflix, no one is going to miss you.
So what your saying is you can’t deliver what you charge me $200 a month for and now you want more money to provide what you can’t deliver now.
Hurm … I don’t how net neutrality has any thing to do with AT&T failing to deliver what it sold.
Using your postal service analogy, your business model is to charge those who send the letters/parcels and then charge the recipients based upon how many items they want to receive per day, if they don’t pay enough the letters go in the bin.
That doesn’t sound particularly fair.
You watch rising prices and cuts in service, the inability to keep up with rising net consumption. I wonder how AT&T or Comcast will keep up when Google fiber grows out to the midwest.
I love your comparison with USPS.
The great thing about USPS is, that if you send a letter within your own ZIP code in CA or send the letter to Wainwright, AK, then the price is the same. And don’t tell me, that the costs for USPS is the same in both cases. They don’t demand subsidies from Wainwright to deliver mail to them, just because they are more expensive then other cities. When you send a local letter, then you pay extra, so that others can send mail to Wainwright at the same price. And Netflix have also payed the same, to send DVD’s to Wainwright and Beverly Hills. USPS earned money on Beverly Hills and lost money on Wainwright.
Since you are selling a sized product, i.e. 15/1 Mbit, then that is what you should give the customer.
Coca Cola would not survive, if some of the bottles contained less then others – just because the demand is higher in some areas or seasons. In the same way, you should be able to deliver, what you sell to your customers. And if you are unable to deliver, then you should sell smaller packages/speeds.
Telcos have been asleep on the job for decades pretending the Internet isn’t happening. They’ve only themselves to blame.
What I want to know is how communications regulators are going to make it reasonable for new businesses to figure this out, these old, outdated companies are albatrosses on consumers but have a stranglehold on the networks. So readers, stop whinging at AT&T and the rest, and speak to your senators because this this needs major reform.
Epic fail on this blog post ATT.
If you can’t deliver the services, that is your problem.
people at home are paying for service from you, it your job to deliver it, not tell them how they can use it, or tell who or what they are using it on to pay you as well.
I already pay a ridiculous price for AT&T internet that never, ever meets the download/upload speeds advertised. And interesting that you focus this specifically on Netflix. I suppose in your ideal world, Netflix, Pandora, Youtube, Vimeo and any other streaming service provider would have to build the infrastructure to provide access for their content. At this point, I kinda hope they do, just so I can give them my money instead of AT&T.
Seriously. Your bandwidth already sucks. Quit giving people more reasons to hate your service.
The reasoning in this article is completely flawed. Why do telecom companies feel so entitled? I pay a monthly fee to receive SERVICE!
Apparently that is not enough. I am just appalled by this whole article.
It makes me sad I am actually a customer. Time to rethink that.
As I read these comments, the first thought that comes to mind is the smaller ISP’s. As an employee of one, I can tell you that there is no way we can provide the bandwidth required to support our 1200 customers and continue to be profitable. The cost of bandwidth is extremely expensive on our end mainly due to the company size. Like everything else, the more you buy, the better price you get. In order for us to provide the levels of service the bigger companies offer, we would have to raise subscription prices, or enforce data limits. While these big companies should be able to live up to these expectations, the small companies that drive mainstream society will ultimately fail to keep up. Big business wins again.
Wow… The lack of knowledge and “gimmie” attitude shown by most of the commentators is astounding.
It’s really quite simple, moving more data costs more money. Arguing that Netflix shouldn’t have to pay more to push more data around is like arguing that you as an AT&T customer should get the fastest available line for the same price as the slowest one. Impose such a requirement, and all you’ll do is give the big data movers a price break by forcing those who use very little to pay higher rates. This is a blatant attempt by Netflix to make non-subscribers subsidize their service.
That’s not to say that AT&T doesn’t bear some culpability in the resultant mess… They are, after all, the ones who have oversubscribed their lines based on the assumption that nobody would actually be using the maximum rate 24/7. So they definitely do need to fulfill any contractual obligations they may have made regarding service level and price, even if doing so does cost them money. And we probably need to stop giving them free easements and taxpayer subsidies. That doesn’t reduce the cost of their service, it merely hides some of it. Personally I’d rather get the true bill up front. Much easier to decide if it’s worth it or not.
Propaganda. I think you can tell from the other comments here that the constituency you’re attempting to influence is too smart and informed for your tactics to be affective. Why is that most other developed countries around the world have higher bandwidth and lower prices for internet access than the U.S.A? I figure with your standing as an ISP in the United States that you should be an expert on that topic.
AT&T, you’re a bad company and you should feel bad.
I am leaving ATT over this debacle. I cannot believe ATT is unprepared for video streaming. I am certain I can find another provider.
AT&T has already been given plenty of money, both in the form of direct subscriber payments, and tax redistribution from fees levied on all telecommunication customers in the 90s. If your network can’t handle the modern era predicted ages ago, and already funded, then perhaps you need to sell your infrastructure to a company that can run it better. The network you are building in Austin should have already been up and running long ago, including the transit connections needed to deliver the promised bandwidth end to end.
Please don’t act surprised that Netflix exists and is using a lot of bandwidth. This has been predicted, and paid for already. Double dipping is not a welcome idea by your customers.
“that people who don’t subscribe to Netflix should nonetheless pay for Netflix. ”
Does this mean AT&T is rolling out unbundled per-channel cable packages? This non-fan of sports finds the irony amusing.
If deal-making between ISPs and content providers is what determined what was available online, Internet content would look like cable TV — 500 channels and not much on. Instead, the internet is a delightful cauldron of innovation and creativity. This freedom to innovate is made possible by a level playing field for all content creators. ISPs charge their customers for the maximum rate of data consumption — it should not matter what they choose to consume. If content choices tend toward higher bandwidth needs, consumers will purchase faster internet plans. I’d hope AT&T can just be happy about that — trying to play the other side of the relationships is bad for all of us in the long run.
Can you please rename the title of this post appropriately: “Who Should Pay to Ensure Delivery of Netflix?”
Because I already pay for Netflix.
Mr. Cicconi states “Someone has to pay that cost.” Indeed. I pay AT&T a large monthly fee for access and bandwidth. Are you going to rebate any fees you extract from Netflix to your customers who already pay for the service?
Netflix has never said anything about getting its bandwidth for free. They simply object to having to pay a higher rate than everyone else.
Who should pay for Netflix’s bandwidth? Netflix. And they already do. But you want to charge them more because your infrastructure can’t keep up.
Click my username to read more about what Cogent (Netflix’s ISP) really wants, instead of the BS made up here.
As usual AT$T is squirming their way out of one deal and saying we never promised that. If the consumer is paying for said bandwidth then the provider of said services should deliver it. PERIOD! Best bet….dump AT$T and find a honest company.
Mr. Cicconi;
Your missing the point:
As usual Mr. Cicconi and AT&T you have it wrong. AT&T is being greedy and double dipping, looking for excuses to cover up the fact it is screwing consumers and counter arguments against its business model. AT&T should finance its own network upgrades and improvements using a part of the money it earns from its subscribers. We pay for Internet access where we decide to go once we are online is none of your company’s business. AT&T needs to be a dumb pipe as do all Internet providers let us choose what services we want to use not prioritize your own content and services or those of other companies able and willing to pay your extortion.
Without true Net Neutrality Netflix will have to pay each ISP a toll for the ISP’s users wanting to access Netflix to access the service.
Costs will increase for Netflix and they will be forced to raise prices on their subscribers prompting some to leave Netflix which before was helping cord cutters save money. Netflix subscribers no matter which ISP they have pay for Netflix service – through their subscription fees directly to Netflix.
You need to pay for your own network improvements – upgrading bandwidth etc on your network using a portion of your profits.
AT&T and other ISPs should pay out of their own pocket for their network improvements. It’s not Netflix’s responsibility or Google’s despite former CEO Ed Whitacre’s comments.
I already pay around 60+ bucks just for Internet and modem for 18Mbps speed. I stream Youtube and Netflix for max of 10-20 hrs a week. I don’t play online games or other streaming. But it takes ever to load and which isn’t a problem when I was a comcast customer. My new location, Uverse is the only option for the Internet. It is very unfair to charge Netflix for good streaming.
Yes, AT&T should provide/build/will into existence facilities for its customers to access the internet, the entire internet, in exchange for monthly subscription fees from those same customers. That’s how the whole thing works and it’s not a remotely unreasonable demand. The fact that, thanks to services like Netflix, more users want to take advantage of your services and consume greater amounts of bandwidth is not a problem that entitles you to compensation from Netflix.
In recent months I’ve had more problems with my Netflix stream on Uverse than ever before. My AT&T Uverse connection is up to around $75 a month. You already are getting paid to deliver Internet service by the consumers. You are attempting to double dip and I hope the FCC will step up and enforce Net Neutrality to protect consumers.
I recently upgraded my Uverse subscription to receive “UP” to 12 Mbps only to get a mere 10 to 15% improvement in network performance which is not enough to have a good Netflix experience. But according to AT&T I have to pay extra money to Netflix in order to recieve real HD video. Well, no way it will happen. I hope Google fiber is rolled out soon in my Kansas City neighborhood to be able to dump this greedy, underperforming, arrogant AT&T.
The analogy by this Mr.Cicconi is total rubbish.
When Netflix sends DVDs by email, they have to cover the cost of mail delivery because I do not pay a monthly fee to goes towards USPS mailing service.
In case of the internet, I already pay AT&T for unlimited internet delivery…yet they’re still complaining that Netflix has to cover the costs of data delivery?
Then why the hell am I paying AT&T for monthly ‘internet access’??!
Stay greedy AT&T cause it looks like you’ve even convinced the FCC that the internet should no longer be free and open.
America..the land of the free and home of the brave is neither of that these days. Thx AT&T but please don’t us any more favors.
If I pay FPL (Florida Power and Light) or any other power company, they do not dictate how much power I use or what I use that power for.
Although with power I am paying a variable amount of money for a variable amount of power, the same argument can be made for internet service (where I am paying a set amount of money for a set amount of bandwidth).
If I pay AT&T or any other ISP, they do not dictate how much bandwidth I use or what I use that bandwidth for.
AT&T and Comcast seem to be of the opinion that because their infrastructure is unable to handle the demand of providing the service they charge their customer for, someone else should foot the bill. This mentality is ludicrous.
It would be like the local gas station telling the gas company that supplies them that *they* need to pay additional pumps because they have an influx of drivers. In reality, the gas station has an influx of drivers, so should therefore pay for additional pumps, or loose customer.
If I pay FPL (Florida Power and Light) or any other power company, they do not dictate how much power I use or what I use that power for.
It would be ridiculous for a power company to tell me I can’t use the new LCD TV I bought, or to try and extort fees from different TV providers to allow them to receive power at my house.
Now, the ISP model is slightly different in that they have a max-bandwidth cap with a fixed price, (versus the variable usage/variable price model of power) but the same statement can be said:
If I pay AT&T or any other ISP, they do not dictate how much bandwidth I use or what I use that bandwidth for.
AT&T, Comcast, and Verizon are trying to make it okay to tell me I can’t use a specific web service, and/or extort fees from different web services to allow them to send data to my house.
(comment from above split due to length)
It’s insanity, and could be fixed if ISPs were regarded as “utilities” just as phone, water, and power are. Instead, we have an FCC chair that is incapable of accepting responsibility to fix this problem and/or under too much pressure from lobbyist paid for by the ISPs.
AT&T, Comcast, and Verizon seem to think that because their network is congested due to Netflix subscribers, the blame should fall on the content distributors, when in reality, if Comcast cannot provide the services their customers paid for, a connection speed as advertised that can access the internet, *they* are the ones who need to foot the bill and upgrade their infrastructure.
Period.
Your analogy of neighbors paying for one’s mail service is shaky at best.
I currently pay you a certain sum of money for access to up to 6 Mbps of internet access. Your concern should not be what that content is, whether file access to the cloud, web traffic, video streaming, online gaming, or email access. YOUR CONCERN should be insuring that you have the capacity to provide the bandwidth which I am paying for. If you can’t do that, and feel that you must whine about it, then perhaps I have made a very poor choice in using you for an ISP.
To suggest that netflix should pay the freight for delivering streaming media is to suggest that someone sending an email should pay postage. That’s just not how the internet economics functions. Consumers and businesses pay for access to the last mile and they subsidize the cost of the backend/trunk. Everyone pays for what they use. (the only caveat would be if netflix was using consumers network as a CDN which is improper use and as a consumer I’m not sharing my bandwidth for that)
What’s the big deal? We all pay to have channels on that we never watch. Another pet peeve of mine is that Direct TV (maybe Verizon) and the NFL lock us out from watching our favorite teams. When will we have access to our favorite teams. I don’t like the teams in my area at all.
Perhaps you could compete for new subscribers in other markets for increased revenue instead of running mob style protection rackets on the companies who drive customers to your internet service offerings. Any thinking person can see that you want to charge both the content providers and the content users for the honor of sharing information on your toll-road. I hope the internet get classed as a utility soon, and regulated as such.
“Netflix may now be using an Internet connection instead of the Postal Service, but the same principle applies. If there’s a cost of delivering Mr. Hastings’s movies at the quality level he desires – and there is – then it should be borne by Netflix and recovered in the price of its service. ” Wow sounds like they are going to try and raise the prices for customers of companies that have any type of electronic delivery so they can get a fat fee. This is also worrying because AT&T might decide to start charging their customers a fee for subscribing to Netflix or another service. One of the reasons I pay for the top internet plan is because of Netflix. This makes me consider switching from AT&T. I don’t want to support a greedy or immoral company.
All this talk from Ciccini is just basically executive double talk in order to obtain more money from his customers. As mentioned earlier, your company has an agreement with me to provide 6Mbps service and it should not be concerned with the source of that content. What are you going to do if suddenly Gmail is flooded with new customers or YouTube? Are you going to try to charge them fees as well?
With my 6Mbps service, I am lucky if I get 1Mbps Netflix streaming at primetime. So I think what I’ll do is pay of my bill this month. Would that be ok, Mr. Cicconi? It seems to fit your business model rather well. I don’t think your board would be to happy with you, though!
Oh well, I’m sure more people will just do what I just did ten minutes ago . . . Call Comcast, sign up with them and drop your sad excuse for an ISP.
Dear Mr. Cicconi,
I am a customer of your service (not by choice, certainly), I already pay you a not insignificant amount every month for unfettered access to the internet. It is not the case that your company has to “accept all of Netflix’s content – indeed all of the content on the Internet – without charge”, you are already charging me, and all of your other customers for this. As a result, U-verse revenues go up every quarter, and in 3Q13 those revenues were up 28.1%, your total subscribers were up by 10 million, and your annualized revenue stream for U-verse is $12 billion. Netflix’s popularity is at least in part responsible for some of this growth, but that is not enough for you, is it. I can guarantee to you that if I ever have the option for Google fiber, or any other broadband service, I will drop AT&T like a hot rock, and it is your greed that will be the number one reason.
The problem with the statements made here, are that your customers have already payed you for the service to exist and be good. By subscribing to a service with an explicit capacity and bandwidth, one would expect to receive the content at the performance provided by service. NOT at the performance allowed by the amount of money the content provider has given you. If delivery is an issue, create a higher-price tier (which you have already done) and profit off of that (which you already are!).
Stop playing the middleman and just be happy there is one more reason to subscribe to your service. End of story.
LOL, if you cannot keep up with demand then you should not take peoples money. The notion that netflix has to pay you in order to provide a service that you already bill your customers for is extortion and it should be illegal. By throttling netflix you are only hurting your customers and they like me will leave. Sounds like you (not netflix) has a problem, and it is sad that netflix is forced to cought it up or else.
You annoy me. Subscribers pay for a service to have internet access and they can get so much data per month. Why does it matter where that data is coming from? We paid you already. If we want to stream netflix all day long we should be allowed to. If we want Hulu or Amazon streaming we should be allowed to also.
You limit my ability to stream my services so you can try to get more money to pay for your upgrades is pathetic. NO ONE will agree with your moronic stance on making content providers pay more. If it wasn’t for NETFLIX and services like that, people wouldn’t need broadband internet in the first place IDIOT.
Who pays for Netflix traffic to be on your network? I do, when I pay my cable bill every month.
You’ve oversold your product, and now you’re trying to cast off blame. It’d be like if delta sold 500 tickets to a 100 seat plane to Florida and then tried to blame Disney World for “crowding up its planes.”
If I prepurchase (subscribe) 1000 kWh from the electric company each month, they shouldn’t feel like they can charge me more because I actually use all 1000 kWh. Netflix isn’t asking AT&T to deliver broadband content a zero cost, *I* am demanding that AT&T do this because it’s what I’m paying for.
Well tomorrow is the last day of UVerse for me. Comments like this AT&T executive made show the company has absolutely no clue. Of course Comcast is probably not much better but it’s the only other choice where I live. I’m done with TV too, only Netflix, Amazon Prime and local antenna from now on.
Well, I think it could happen if NetflixBot limits their connection to NFLX only and nothing else.
As long as you’re using the internet for something else other than NFLX then both of you need to pay for it.
How do Time Warner and so many other ISPs manage to negotiate deals to carry Netflix’s data — which I as a uverse and netflix subscriber am already paying for — yet ATT refuses?
Jim Cicconi… you need to get a clue. The problem isn’t with Netflix, its with your own company.
I purposely bumped up to a level of broadband service that your employees ‘claimed’ was good for streaming media (and I specifically named Netflix as an example). AT&T UVerse is simply not delivering what I pay for. When I can go to ANY streaming service and it works perfectly well vs Netflix, something tells me that AT&T is doing something that is bottlenecking the service.
Telling another service that they should increase their rates is the cowards way out. Remember its the customers that help you get a salary!
I’ve already killed my AT&T wireless. I’m only on UVerse because its my only ISP option. If I had a choice, I wouldn’t we commenting!
I wonder what will happen when these folks try to get Microsoft or Apple to pay for their network traffic delivery. Or what will happen when ATT decides to shake down the US Govt to deliver theirs.
It’s funny how ATT makes it sound like Netflix doesn’t pay their upstream provider for bandwidth. Of course they do, and a pretty penny. But that’s how it works. I pay my local ISP for a connection to the internet, and Netflix pays for theirs.
Also, in the long run ATT Uverse service sucks. I pay for up to 18mbps delivery which I never see. Even my installer said I’d never see it. The person who sold it to me me said I would. I’m usually in the 5-10mpbs range. My 4G LTE phone is faster. It’s a crock.
Considering that AT&T forced customers in our area to upgrade to uverse from dsl and therefore a higher price too, but did not upgrade the underground cable I have no positive remarks for AT&T. Netflix is slow-stopping every few minutes now. Salesmen said uverse would solve all our problems. A bunch of lying crooks at AT&T. But Comcast sucks too I hear. Upgrade the underground cable everywhere or reduce our rates to the old rate schedule from when the old stuff was put in. Others in our area with upgraded lines are having no problems but we are paying the same price with the old lines buried to our houses.
Why isn’t Netflix charged for the bandwidth it consumes on AT&T’s network?
I am paying for next-to-maximum speed service on Netflix, and regularly clock better than 22mb speeds. Yet Netflix, viewed on my Blu-Ray player, now stutters and stops every few minutes. Never had a problem last year or the year before. ATT seems to be doing something deliberately to mess up the Netflix streaming, and they are perilously close to losing my business.
magine if AT&T was a city-bus with an exclusive contract to serve your town, and it noticed that a lot of passengers were getting off at a certain stop every day to visit a restaurant. What AT&T is doing is saying “We will no longer stop near that restaurant unless it pays us a bribe,” (and they’re hinting, “We will stop at a competing restaurant if they do pay a bribe”). When the restaurant objects, AT&T says, “Hey, there’s no such thing as a free lunch.”
This isn’t “just business” — it’s extortion.
with Verizon’s sale of it’s California, Texas and Florida wireline assets to Frontier, AT&T is doing the same state-by-state. They completed a $2 billion dollar sale in Connecticut to Frontier late 2014.
Whoever they sell to (Frontier, Windstream, CenturyLink or Sonic) I’m looking forward to it. I am hoping Sonic comes to all of the Peninsula and AT&T be done with this area.
When I pay for your internet service. I’m paying for you to properly manage your network and that includes keeping your interconnects unsaturated. If you can’t handle the load you should not sell me at big pipe! If you do and then down your network you ‘connect’ that pipe to a pipe that does not have proper capacity to handle all the pipes that you are connecting to it then you are at best selling your customers bandwidth you can’t deliver and that is cheating your customers! You charge me to download and the other carrier charges them to upload. Interconnects costs should be paid equally by both carriers in the link and kept below the level of usage that you use for your internal networks. That is how real net neutrality should work but of course then you would have no way to charge more for ‘diferentiated’ services so I don’t expect you to do withoit kicking and screaming. Hopefully competiton will make all of you see the light.
There is a simple solution – bill by the gigabyte of usage or pay for “DEDICATED” service. Either way the consumer will not be happy but no Internet provider should be responsible for meeting the increased demand. It is the same with your power bills – use more – pay more. Things will change soon weather we want it or not.
I already pay for gigabit internet from ATT. Why should Netflix pay you to deliver the service I am already paying you for?
If I pay Amazon to ship me a package, should UPS charge Amazon again to deliver that package?
Your reasoning is absolutely absurd. If you posted this expecting sympathy you were way off the mark.