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.