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Netflix CEO: Caps Used To Drive Broadband Bills Up
Lack of Broadband Competition the Primary Problem
by Karl Bode 01:37PM Friday Apr 01 2011
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 fast first into that country's low caps and high overages. Netflix has insisted such a pricing 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. This week Netflix lowered streaming quality in Canada to try and help users deal with caps, and has some choice words for CTV:
Netflix says Canadian Internet providers are using data caps to inflate their profits, not provide better service. In an interview Tuesday, CEO Reed Hastings said it's unreasonable for ISPs to be charging dollars per gigabyte for overage fees. He says the real cost for data is closer to less than a penny per gigabyte, although ISPs have disputed that estimate.

"It's an effective way to drive the bill up, that tends to be why caps are used," he said. "Internet traffic is extremely cheap and the problem is there's not much competition in this market and that's why you get these big prices. Having high speed Internet is really important to Netflix, arguably it's really important to any society also," Hastings said.
As we have been discussing, taking on major North American ISPs like AT&T and their disingenuous justifications for higher prices is going to make Netflix a large number of very deep-pocketed adversaries. You can expect a lot of attacks on the company from all the usual telecom angles (think tanks, hired PR folks, paid fauxcademics) as the year rolls on.

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If you can read this.... RUN

Huntersville, NC

3 recommendations

reply to gunther_01

Re: New Side Business

said by gunther_01:

It's interesting that once they figured out that ISP's aren't going to foot the bill for Netflix's extra network usage, and they started to have to "work" towards keeping "their" customers happy, they have something to complain about.

It's not Netflix's extra network usage, it's the user's extra network usage, because the user chose to use the service. Netflix pays for their connection to the internet on their end, I pay for my connection on my end. We're both paying our parts, so why should ISP's be allowed to charge double for the same bit?

Also, this has been continuously shown to be a ploy to strangle Netflix and similar services, because they fear the dying out of traditional television services. When a company, such as AT&T, can supply unlimited IPTV, then technically they can provide unlimited internet for non-television applications with minimal difference in cost.

Reptiles Are Cuddly And Pretty
Mount Airy, MD

2 recommendations

Perhaps Netflix should start investing in some last-mile connectivity. Instead of whining about the lack of competition, do something about it!
"Net Neutrality" zealots - the people you can thank for your capped Internet service.