Hastings on Thursday explained all the reasons why ISPs like Comcast and AT&T shouldn't charge third-party services like Netflix an "arbitrary" interconnection fee. His blog post was prompted in large part by a multi-year deal Netflix struck with Comcast to ensure that its streaming traffic would reach Comcast subscribers with less buffering and without reductions in quality. To Hastings, even though Netflix accounts for nearly a third of peak residential Internet traffic, the cost-sharing model imposed by ISPs is unfair unless they're willing to also share in revenues. Fat chance of that happening.
Cicconi's long-winded response to Hastings' wordy blog post is simply that it costs money to support the increased volume of traffic Netflix is delivering, and Netflix should be the one to pay it.
"Mr. Hastings' blog post then really comes down to which consumers should pay for the additional bandwidth being delivered to Netflix’s customers. In the current structure, the increased cost of building that capacity is ultimately borne by Netflix subscribers," Cicconi explains. "It is a cost of doing business that gets incorporated into Netflix’s subscription rate. In Netflix’s view, that’s unfair. In its view, those additional costs, caused by Netflix’s increasing subscriber counts and service usage, should be borne by all broadband subscribers – not just those who sign up for and use Netflix service."
Cicconi made comparisons to Netflix's DVD-by-mail service. He points out that the cost of delivery was included in the subscription price, and that it would've been unfair and illegal to demand a customer's neighbor pay the cost of delivering his movie.
"Yet that's effectively what Mr. Hastings is demanding here, and in rather self-righteous fashion," Cicconi says. " Netflix may now be using an Internet connection instead of the Postal Service, but the same principle applies. 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. That’s how every other form of commerce works in our country."
The bottom line as far as Cicconi is concerned is that "there is no free lunch" and Hastings' "arrogant proposition is that everyone else should pay but Netflix."