Netflix initially tried to downplay metered billing
as a threat to their business, though in recent months the company has gotten increasingly vocal about the issue -- especially after launching streaming video service in Canada and running face first into that country's low caps and high per byte overages. Netflix has insisted that the "cap and overage" model is in no way tied to economic reality
, is a move by ISPs to to protect traditional television revenues
, and recently stated AT&T's new caps were moving "in the opposite direction
" from what consumers want.
The company took things a little further this week, by running an editorial in the Wall Street Journal
entitled "Why Bandwidth Pricing is Anticompetitive." In it, Netflix General Counsel David Hyman discusses again how the overages being imposed by companies like AT&T are in no way tied to any sort of real-world costs, and are something being imposed by a company with the luxury of limited competition:
Wireline bandwidth is an almost unlimited resource due to advances in Internet architecture. Adding more capacity is easy. The marginal cost of providing an extra gigabyte of data—enough to deliver one episode of "30 Rock" from Netflix—is less than one cent, and falling. That's a very different sum from what AT&T in May began charging customers of its DSL and U-verse services. AT&T is adding new charges that are 20 times the price of providing the service.
Hyman also reiterates that protecting their TV business from competition is AT&T's incentive for the move:
This anticompetitive aspect is particularly apparent when one stops to consider that AT&T's U-verse is a television service delivered as Internet data traversing a network. Similarly, Comcast is testing its own Internet-based television platform in Massachusetts. So it's no surprise that bandwidth caps would not apply to the data—e.g., TV shows—that AT&T and Comcast are delivering via broadband, but only to a third party's data—e.g., TV shows from Netflix.
None of these points are particularly new, though it's nice to see Netflix not playing dumb and mute on the subject. Most service, content and Silicon Valley companies who will be impacted by the carrier effort to artificially constrict ample pipes insist on playing dumb and mute on the subject.