“Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix,” the company said in a letter to shareholders. “The combined company would possess even more anticompetitive leverage to charge arbitrary interconnection tolls for access to their customers."
Netflix obviously is referring to its own recent deal with Comcast, which involves paying a fee to “interconnect” directly with Comcast's servers. Netflix agreed to the arrangement after Comcast subscribers reported problems streaming videos from the rental company.
But Netflix isn't thrilled with the deal. In fact, CEO Reed Hastings recently called for “strong” net neutrality regulations, which he says will prohibit Internet service providers from “charging a toll for interconnection to services like Netflix, YouTube, or Skype.”
Netflix also took the opportunity to continue its public spat with AT&T over interconnection fees. The video rental company told shareholders that AT&T's fiber-based U-verse connections are slower than DSL connections offered by other providers. “It is free and easy for AT&T to interconnect directly with Netflix and quickly improve their customers’ experience, should AT&T so desire,” Netflix wrote.
Netflix went on to call attention to a recent AT&T blog post that criticized Netflix's public opposition to interconnection fees. That post essentially accused Netflix of trying to avoid paying its fair share of bandwidth costs. AT&T wrote: “If there’s a cost of delivering Mr. Hastings’s movies at the quality level he desires -- and there is -- then it should be borne by Netflix and recovered in the price of its service."
AT&T's remarks drew numerous critical comments, many of which pointed out that Netflix, as well as subscribers, already pay AT&T for broadband service. “I pay for 15Mb down / 1Mb up for access to the internet. Last I checked, Netflix is on the internet,” one user wrote.
Another said: “AT&T is already being paid to deliver Netflix content and Netflix is already paying to be connected via their ISP. AT&T’s job is to connect the two parties in accordance existing terms of service.”
Netflix today said that those comments -- and others like them -- show that “AT&T customers expect a good quality Netflix experience given how much they pay AT&T for their Internet service.”