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AT&T Exec Calls Netflix "Arrogant" For Expecting Net Neutrality 466

jayp00001 (267507) writes "'As we all know, there is no free lunch, and there’s also no cost-free delivery of streaming movies. Someone has to pay that cost. Mr. Hastings' arrogant proposition is that everyone else should pay but Netflix. That may be a nice deal if he can get it. But it's not how the Internet, or telecommunication for that matter, has ever worked,' writes AT&T Senior Executive Vice President of Legislative Affairs, James Cicconi. Mr. Cicconi took issue with a blog post from Netflix CEO Reed Hastings on the importance of net neutrality.
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AT&T Exec Calls Netflix "Arrogant" For Expecting Net Neutrality

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  • by Lloyd_Bryant ( 73136 ) on Monday March 24, 2014 @04:12PM (#46567221)

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

    What, you mean that someone who pays his ISP for a connection to the Internet shouldn't have to pay extra if he actually wants to use that bandwidth? I'm pretty sure that'd be classified as communism, or terrorism, or whatever the 'ism of the month is.

    ISPs will fight tooth and nail to keep from becoming the "dumb pipes" that true net neutrality would make them. Because then they wouldn't be able to siphon off the profits of companies that have actually innovated themselves a business in the Internet space, rather than just continuing to make a buck off of their infrastructure semi-monopolies.

  • Re:Double-dipping (Score:5, Informative)

    by Gothmolly ( 148874 ) on Monday March 24, 2014 @04:15PM (#46567267)

    Netflix streams from AWS, and offers ISPs a sort of staging platform where popular content can be cached within the ISP network, eliminating the peering issue. Many cable providers refuse to implement it.

  • Landlines (Score:4, Informative)

    by mepperpint ( 790350 ) on Monday March 24, 2014 @04:17PM (#46567281)
    I would like to introduce Mr. Cicconi to a device called a 'Telephone', particularly a variant colloquially termed a 'landline'. Historically 'telephone' companies, such as AT&T, would sell users a 'landline' to which they could connect a 'telephone'. These services included a basic connection charge as well as usage charges. In the event that a connection was made form one 'landline' to another, the party that initiated the session was charged for the usage of the session. This is exactly the treatment that Mr. Hastings is proposing.

    In particular, I would like to note that while some providers charged users based upon usage, other providers allowed for a fixed cost plan where the subscriber paid a flat payment independent of their usage. These sorts of unlimited plans are exactly what AT&T, Comcast, etc. are selling as an ISP to their customers now, so they have no business trying to extract usage fees from Netflix and they have no business telling us that we're asking non-Netflix customers to subsidize the connections of Netflix customers. We've paid the fees that AT&T, Comcast, etc. demand for unlimited usage, so they need to provide it without whining about how they're not getting paid twice for the same service.
  • Data caps (Score:2, Informative)

    by NapalmV ( 1934294 ) on Monday March 24, 2014 @04:18PM (#46567297)
    I believe it's about the data caps. Netflix wants them removed, AT&T basically says that users going over 150GB/month should foot the bill for infrastructure upgrades (as opposite to *all users* including those that do just e-mail and light web browsing). Seems fair to me.
  • by PortHaven ( 242123 ) on Monday March 24, 2014 @04:42PM (#46567585) Homepage

    I pay you $68/month for my broadband internet.

    I don't give a damn about your whiny bitching, you deliver my content. If Netflix is the content I want, you !@#$ deliver it.

    Playing these BS games is just you being greedy !@#$s.

    The fact that my internet bill went from $35 --> $68 a month in a period of 7 years pretty much tells me you're just a bunch of greedy fucks.

    So at this point, I am of the opinion we need to file a class action lawsuit against you for not delivering what we paid for.

    And yes, your contract stating that said performance may not be available at all times, I don't think that will protect you. Because IMHO that's a good faith clause, that says hey sometimes shit happens. Sometimes bandwidth or connection will be down.

    But in no way does that give you the excuse to have 0% uptime for providing service. And that's what you've been doing with your games.

  • by Ioldanach ( 88584 ) on Monday March 24, 2014 @04:49PM (#46567679)

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

    It gives you access to services on the web, but they have to pay their connectivity bill, too. If the company they chose doesn't have a good connection to your company, though, then your experience with that company will suffer.

    In Netflix's case, they chose Cogent, and Cogent wants to take advantage of peering arrangements that presume data will cross their links to other providers in both directions equally, but they want to send far more data than they receive. But they don't want to pay the transit fees that would normally incur.

  • by mellon ( 7048 ) on Monday March 24, 2014 @05:12PM (#46568051) Homepage

    That would be true of the major cost of providing internet service were the per-packet cost. But in fact the major cost is in installing and maintaining the lines. Next is the cost of running packets through them. That cost breaks down into network management, energy, and infrastructure. In point of fact, there is no real additional per-packet cost. What costs is having enough capacity to carry the packets. So when I buy a network connection that promises 20mbps of capacity, presumably the ISP has 20mbps of capacity for me. At which point you have to ask yourself, what does it matter whether I use the whole capacity or only part of it? Either way, I'm paying for my 20mbps, and I should get to use it.

    Of course, the ISP doesn't actually reserve 20mbps for me, at least in the U.S. They figure that for every N customers that are paying for 20mbps, they will have to configure 20mbps of capacity. This is where your talk of socialism comes in: if I actually use my 20mbps that I paid for, and you don't, then in theory you are subsidizing my network use, because there's only 20mbps between N of us (where N could be 10, 20, or even worse).

    But even that isn't correct, because it doesn't account for profit. How much of the $80/month I spend on my 20mbps connection is cost, and how much is profit? Suppose N=20. Suppose the profit margin is 90% (which it probably is). That means that 20mbps of actual capacity costs the ISP 0.1*80*N, which is $160. So the ISP is charging the customer $1600 for $160 of bandwidth. They could deliver as much as ten times the bandwidth before their profits went to zero. Chances are that the point at which I am getting Netflix, you are getting Netflix, and all our neighbors are getting Netflix is well below that cutoff, because we typically don't all watch at once.

    But even that analysis is wrong, because in fact your ISP does already have 20mbps capacity to your home which is not shared, and is not amortized across other customers. The capacity that is amortized across other customers is core bandwidth: the bandwidth that happens at the peering point, and between that point and the ISP's network distribution center near where you live. That bandwidth is really cheap compared to the bandwidth they have already delivered to the edge of the network: to you.

    So in fact it's quite likely that they can deliver full Netflix bandwidth to everyone and still make a profit. So where's your socialism in this picture? It isn't there, unless you mean corporate socialism: government-sponsored monopolies that deliver money-printing profits to those that own them, because we have no choice—we buy Internet from the local monopoly ISP, or we don't get Internet at all. And because we have no choice, Netflix has no choice. They can't go with the ISP that offers them cheaper transit, and use that to drive customers to that ISP, because in most markets there is no that ISP. There is one ISP, zero competition, and a lot of people overpaying for internet service.

  • by Todd Knarr ( 15451 ) on Monday March 24, 2014 @05:12PM (#46568055) Homepage

    This is what peering agreements handle, and they're already in place. Netflix pays it's Internet provider. That provider in turn has an agreement with AT&T wherein they pay each other for handling each other's traffic. The problem is that AT&T's mostly an end-user network, primarily clients who receive data with very few servers who send data. That means that at the peering point it's primarily the providers AT&T peers with who handle traffic for AT&T's network, with very little traffic bound for those providers handled by AT&T's network.

    AT&T simply doesn't like the terms. When an AT&T customer requests data from Netflix, providers like Level 3 handles that traffic as it passes from Netflix to AT&T. AT&ampT has two choices. It can peer with Level 3 at the same exchange where Netflix connects and handle delivering the traffic across the AT&T network to their customers. This is usually relatively cheap, but it means AT&T has to build a larger backbone network. Alternatively, they can peer at points closer to their customers and let Level 3 handle the cross-country transit. This way AT&T avoids having to build a cross-country network to deliver data, but they don't like having to pay Level 3 for handling the transit traffic. They'd rather have Netflix picking up the bill for it. But why should Netflix have to pay to accommodate AT&T's decisions about how to build their network? This rightly ought to be a matter for AT&T to work out, deciding what the trade-off should be between the cost of buying cross-country transit capacity from someone else vs. building their own cross-country network.

  • by TubeSteak ( 669689 ) on Monday March 24, 2014 @05:50PM (#46568573) Journal


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

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

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

  • by brxndxn ( 461473 ) on Monday March 24, 2014 @06:06PM (#46568765)

    There is no way to morally or technically side with the ISPs on this one. It is a revenue grab - simple as that. These fucking horrible companies - mainly AT&T and Verizon - have been double and triple charging customers for data on the cell phone side and now they are trying to bring it to the wired side. For example, they charge customers for text messages differently than voice calls. They charge customers for a metered amount of data accessed through their cellphones and then another set of metered charges for accessing via tethering. It's bullshit. It's the same fucking data. It's encapsulated data packets..
    Don't forget that the US has some pretty shitty home Internet connection speeds compared to our standing in the world as a 'technology leader.' Don't forget that the ISPs in the US have received hundreds of billions of taxpayer dollars over the years to upgrade their networks. Don't forget that these companies are 'entitled' to your own property to run their data lines. Also, don't forget that these ISPs have relatively zero competition.
    Also, do not forget that these ISPs run competing media providing entities. They would prefer to control your access to content - force you to watch commercials or pay monthly fees for channels - or force you to pay for 10 channels when you only watch one. When these companies are given an inch, they take a mile.
    I write to my lawmakers telling them we need to look at gutting these companies - breaking them up and separating their media companies from the data providing part. Also, lawmakers need to understand that all data on the Internet is broken into packets. You can always tell who paid for the packets. In this case, AT&T and Verizon are trying to say they want more than the sending and receiving entities to pay for the packets - they want to charge extra for these packets to go in and out of their networks. Once that happens, they will just create more routes and more tolls.
    I don't believe AT&T or Verizon deserve to exist as they currently do - they are putting the US at a huge disadvantage. Also, their CEOs are awful human beings.

  • by BronsCon ( 927697 ) <> on Monday March 24, 2014 @06:26PM (#46569019) Journal
    That's all fine and dandy; then AT&T customers who want access to that content can move to another provider. My ISP was literally the first on board for SuperHD peering; Netflix provides the equipment, the uplink (bandwidth), and the content, at no cost to their peer, why should they be paying to provide this?

    But, that's not actually the issue here. AT&T wants Netflix to pay them for their data that hits the AT&T network via their peering agreement with Cogent. Figure that one out... Netflix pays Cogent, AT&T users pat AT&T, AT&T peers with Cogent; if there's an imbalance in that peering agreement, that's between AT&T and Cogent, not AT&T and Cogent's customer.
  • by BronsCon ( 927697 ) <> on Monday March 24, 2014 @06:52PM (#46569271) Journal
    I never said there was no cost, I said there was no cost to the peer, the party who is not Netflix, that Netflix foots the bill for it, or, to put it another way, that Netflix pays and AT&T (or whichever peer) does not. My ISP peers with Netflix in this manner; I've had many a conversation with the CEO of my ISP, who, of course, was directly involved in setting up this peering. In fact, my ISP was literally the first ISP to jump on board for this. According to my, in my opinion very reliable, source, Netflix pays for the rack space, the power, the backhaul, and the interconnect between their equipment and ISP equipment, including paying for rack space and power for ISP equipment and, in cases where the ISP does not have appropriate equipment in place already, is willing to pay for part of that, as well. In the case of my ISP, they've been growing rapidly for the past few years, so they actually had equipment in place already, but if they did not, Netflix would have covered it.

    Seems pretty reasonable to me. Also seems like that article is putting a spin on what Hastings said.
  • Re:Double-dipping (Score:4, Informative)

    by rkohutek ( 122839 ) <<randal> <at> <>> on Monday March 24, 2014 @07:57PM (#46569809) Homepage Journal

    Interestingly, as a tier-2/regional operator, these cache devices are hard to get because they fill a certain role. We have worked with Netflix to try and get the caching device, and it just doesn't do any good if you have less than 3-4gbps of pure Netflix traffic. It does not work because the caches have to ... populate the cache! They do this regularly, and the do it overnight -- but it is an absurd amount of data, especially when there are multiple bitrates. I am told that the cache runs > 1.5gbps to populate, almost nightly. So if you don't push significantly more than that, it is not a cost winner.

    As a transit provider/local ISP/bandwidth buyer, 3+gbps is a lot of traffic. We found it mildly more attractive to buy a 10gbps wave to a Netflix-available peering point and peer directly with them than to buy 2+gbps of transit from Level3/Cogent/HE, especially factoring in last mile costs.

    Also of note, my own traffic engineering testing shows that Netflix *strongly* prefers Hurricane Electric (as of last fall), then Cogent, then Level3.

    There is a really horrible hole between 1gbps and 10gbps of consumption that there isn't a good solution for. Netflix knows about it, but it is a very difficult target to hit -- it may be cheaper to buy transit, or it may not be, but hardware isn't the answer. This same situation exists for all CDNs - limelight, edgecast, akamai, L3.

    As usual, peering is the answer. Our customers pay us to bring them Netflix ... so we buy a wave and backhaul it hundreds of miles to satisfy them. It'd be ridiculous for me to charge Netflix when my customers are asking for it!

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