AT&T's Jim Cicconi, who oversees the telecom's global public policy, waded into the increasingly heated debate over the future of net neutrality today. Cicconi published a response to Reed Hastings, who earlier this week accused the big American ISPs of violating net neutrality and harming consumers by creating data bottlenecks in their networks and then asking companies like Netflix to pay for upgrades that would alleviate this congestion.
"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," writes Cicconi. "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."
"Mr. Hastings’ arrogant proposition is that everyone else should pay but Netflix."
The root cause of this conflict is the massive growth in the volume of traffic Netflix sends across the internet. Big internet companies like Google, Microsoft, Facebook, and Netflix have traditionally relied on a three party system for delivering that data to consumers home. Because they don't own any physical pipes themselves, they pay a middleman like Cogent or Level 3 to transit their data to an ISP like Comcast or AT&T who takes it the last mile into customer's living rooms.
Cogent and Level 3 have traditionally relied on a peering arrangement with the ISPs: they agree to a no-fee exchange where they give and receive an equal amount of data. Netflix massive volume of data overwhelmed that arrangement. The question then became which party would pay for the upgrade to infrastructure: Netflix, the middle man, the ISP, or the consumer.
"It’s not how the Internet, or telecommunication for that matter, has ever worked."
Netflix recent blog post argued that the ISPs have contracted with consumers to deliver internet data at certain speeds and so should bear the cost of upgrading the network to meet demand. AT&T, in today's blog post, writes that, "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."
Expect this war of words to continue heating up as FCC and its new chairman Tom Wheeler work on a reboot of approach to net neutrality.