AT&T Senior Executive Vice President of Legislative Affairs James Cicconi has written a monumentally stupid attack on Reed Hasting's call for Net Neutrality. Cicconi says, "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."
What Cicconi ignores is that Netflix is paying its ISPs to be connected to the Internet. And AT&T's customers are paying to be connected to the Internet. And AT&T's customers are asking to have the service they are paying for to be connected to the service Netflix is paying for. AT&T is then demanding that Netflix pay it a bribe in order to carry out the service that its customers are paying for.
If you're an AT&T customer paying for a 4MB/s DSL line, you have entered into a commercial arrangement whereby AT&T delivers you the bytes you ask for as quickly and efficiently as it can. You're not entering into an arrangement whereby AT&T can, if it notices that many of its customers really like a service, charge that service for the privilege of giving AT&T customers what they're already paying for.
Imagine 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.
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.
Who Should Pay for Netflix? [James Cicconi/AT&T Public Policy Blog]