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The Lightwave editorial staff uses The Lightwave Blog to share their thoughts on optical communications and whatever else might be the current topic of conversation from cubicle to cubicle. Feel free to add your own opinions. If you'd like to become a guest blogger, contact Editorial Director Stephen Hardy at stephenh@pennwell.com

Netflix: U-verse stinks and so do interconnect agreements

By Stephen Hardy

The folks at Netflix naturally have an interest in the level of broadband services available to their potential customers; after all, the faster their over-the-top (OTT) video content arrives on their subscribers’ screens, the more likely those subscribers will remain loyal. So Netflix tracks the download speeds of the various Internet service providers and posts the results. And it’s not very impressed with AT&T’s U-verse.

“The surprising news is that AT&T fiber-based U-verse has lower performance than many DSL ISPs, such as Frontier, CenturyLink & Windstream,” wrote Netflix CEO Reed Hastings and CFO David Wells in a letter to shareholders issued in conjunction with the company’s first quarter earnings statement – and shortly after AT&T took Netflix to task for the latter’s support of net neutrality.

The executives made it clear that their criticism of U-verse was part of the larger net neutrality conversation. “This reinforces our view that connectivity to the broader Internet is critical to the quality of experience consumers receive,” Hastings and Wells continued. “The 249 customer comments on AT&T’s anti-Netflix blog post indicate that AT&T customers expect a good quality Netflix experience given how much they pay AT&T for their Internet service. It is free and easy for AT&T to interconnect directly with Netflix and quickly improve their customers’ experience, should AT&T so desire.”

While Netflix states that it’s “free and easy” for AT&T to create such direct interconnections, the OTT video service provider agreed last February to pay Comcast for the same sort of links. The deal apparently has produced immediate results; “Comcast is providing a much improved Netflix experience to their broadband subscribers,” Hastings and Wells reported.

But that doesn’t mean Netflix is happy with its Comcast arrangement. In the same letter, Hastings and Wells appear to bemoan their new Comcast pact while criticizing the proposed Comcast/Time Warner Cable merger.

“Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix. The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers. For this reason, Netflix opposes this merger,” the executives wrote.

The issue at hand is that Netflix is wrong – the interconnection it seeks from AT&T isn’t free. Netflix just doesn’t want to have to pay for it.

And at that’s what will make the net neutrality debate so sticky. For many of those directly affected it’s not about Internet freedom – it’s about who is going to pay. Or, more precisely, who will pass more costs to consumers, the ISP or the OTT service provider. Because it’s the end user who will end up footing much of the bill regardless of what resolution the net neutrality debate reaches.


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Stephen Hardy

Stephen has covered fiber optics for more than a dozen years, and communications and technology for more than 25 years. He is responsible for establishing and executing Lightwave's editorial strategy across its digital magazine, website, newsletters, research and other information products. He has won multiple awards for his writing.

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