AT&T: costs caused by Netflix's growth should not be borne by all broadband subscribers
Who Should Pay for Netflix? — I saw Reed Hasting's blog yesterday from Netflix asserting in rather dramatic fashion (with diagrams) that ISPs should build facilities (he said provide …
Context & Ripple Effects
This is the second round of a fight Reed Hastings opened with Comcast back in 2012 over who pays for streaming growth. The immediate trigger is Hastings' blog post published this week arguing ISPs should build facilities for Netflix's traffic — and AT&T's public policy blog is answering him directly, one day later.
The dispute has real money behind it now: after months of declining Comcast speeds and reports that Netflix packets were being dropped daily because Verizon wanted more money, Netflix agreed in February to pay Comcast for direct interconnection. AT&T's post is the first big ISP to argue publicly that such costs belong with Netflix and heavy users, not the whole subscriber base — and eight major tech outlets picked up the exchange the same day.
First-order effects
- Netflix's just-signed paid-interconnection deal with Comcast becomes the template under attack: if AT&T holds the line, Netflix faces paying similar tolls at every major ISP or accepting degraded streams.
- Verizon and other congested ISPs get cover to demand payment too, since the argument is no longer made privately in peering negotiations but publicly against a named counterparty.
Second-order effects
- Comcast, whose own blog had already accused Netflix of degrading its streams, gains an ally in reframing the debate from 'ISPs throttle video' to 'one content company shifts its bandwidth bill onto everyone.'
- The interconnection market turns adversarial: transit and CDN pricing for high-volume streamers gets renegotiated around whether content providers or access subscribers absorb peak-hour capacity costs.
Third-order effects
- If the pattern holds, the net neutrality debate moves past last-mile blocking rules into paid-peering economics — exactly where the FCC's authority is least settled, setting up a regulatory fight over which side of the handshake pays.
The trend: Broadband economics are being renegotiated around video traffic, shifting the cost question from flat-rate subscriber pricing toward charging large content sources for the congestion they cause.