ATT vs Netflix

ATT vs Netflix

I saw the link from ATT on Net neutrality and had to submit my 2 cents… I’m an ATT customer for the simple reason that my only other broadband choice is Comcast. I’m not a Netflix consumer or a Cable TV consumer.

When was a Monopoly  good for consumers? 

ATT and Comcast operate in a Monopoly market for broadband net services offering very low consumer choice along with very high ISP Internet Prices.  Consumer bandwidth price in Korea is orders of magnitude lower than the U.S according to the table. Note that $70.00 dollars of downloading in Los Angeles will set you back about $5.00 in Seoul. No surprise to see our U.S. Monopolists maximizing their profit at the expense of the internet ISP consumer.

Column #4 in the  wiki link shows bandwidth capability increasing by hundreds and thousands of times with the introduction of each successive wireless network protocol ( 2g, 3g, LTE, etc ). At the risk of mixing metaphors ( wired vs wireless ) its safe to say that each new broadband network technology offers tremendous capacity innovation (more bits for less bucks) at manageable Capex to the carrier. This kind of data on technical capacity indicates that over time, my internet bill could just as  easily decline due to innovation and newer technologies. Just look at Korea where there is some competition – where  downloads are FAST and consumers have 100X bandwidth offered by U.S. ISP’s. Alas i don’t live in Korea  and my ATT ISP bill never drops below $35 for a monthly capacity of 5 Megabits per second.

As Susan Crawford and Larry Lessig explain at the 16:30 mark of the video, “monopolists don’t invest or innovate” at the pace that would be forced on them by a little competition. ATT , Comcast have no reason to invest the massive profits they give to the shareholder. Why should they invest in a better product when they can charge very high price for a crummy product with low consumer choice? They are a monopoly and i’m just a consumer.

ATT’s position smells funny

In the link, the ATT CEO repeats ad-nauseum the argument that Netflix is the villain because customers of Netflix are clogging the net with downloads. There is something truthy there. Conventional numbers say that around 30 percent of the bandwidth used in the U.S. is netflix traffic so why don’t Netflix have to pay. But wait.  Remember that low-bandwidth for high price thingy? Netflix customers already pay their ISP’s for the bandwidth  necessary for delivery of whatever bits the customer wants to pull from the internet.

If I want to stay home and watch downloaded Netflix all month, i need to  make sure that my ISP plan ( currently 5 Mbs for $34.00 a month ) will cover my needs and if not, I will need to search for a broadband product with enough bandwidth to deliver all my netflix downloads. That should be the end of the story and the end of the gobleygook from the ATT CEO about villianous Netflix and Netflix downloaders.

Comcast ATT Monopoly power not mentioned 

What the ATT CEO does not state directly is that they want to turn the tables on both Netflix and the consumer by charging at both ends of each of my downloads. Charge Netflix for what goes in when Netflix network peers with ATT network, while ALSO charging me for what comes out at my computer or my tablet or my TV. More importantly, because they are a monopoly, ATT have incredible leverage that would not exist in a competitive market.  If Netflix balks on the payment then ATT can SLOWDOWN Netflix bits as they entering the ATT network over the peering link connecting Netflix and ATT. ATT simply ID’s the packets delivering my Netflix TV and slows down just those packets until i start screaming at Netflix about jitter and static on my TV during Netflix shows. Very clever of ATT or Comcast to charge Netflix while they lobby the FCC regulators in DC.  Until these monopoly broadband ISP’s are force by regulators to be Net-Neutral or until they have more competition from a  company X promising “unimpeded downloading from Netflix”  the consumer may have to put up with it.   Unfortunately this is not Korea. This is the U.S. and  there is only the broadband ISP monopoly. There is no company X to save me and i am stuck  with ATT’s  product (low choice, low bandwidth and high price).

Netflix competes, innovates

Youtube, Itunes, Amazon Prime, Microsoft and Cable companies all have products offering competition for Netflix. Pre-existing DVD rental companies were thriving competition for the early Netflix products ( not so much after some innovation by Netflix). Netflix was able to innovate faster than “Blockbuster”. In fact, Netflix innovated so well and had a hit consumer product that drove a number of competitors from the business.  Today, if a Netflix customer doesn’t like the product, there are many other choices out there. Not so for a broadband customer of ATT.

I want what Larry Lessig wants from an ISP

In the video he describes an ISP as just a utility that delivers “bits” to my household computer devices. I’m happy to pay a price to ATT that reflects the bits i consume each month (ie bandwidth pricing) and that keeps comparative speeds neutral regardless of whether the bit is part of a netflix movie or part of an email. I don’t like the idea of ATT being a traffic cop on the part of my Internet connection where my Googling query enters ATT’s network from Google or where my TV download streams enter ATT from Netflix. I don’t need ATT to do the equivalent of permitting UPS trucks on the hiway a speed limit of 80 ( because UPS pays for it ) while limiting the milkvan to 50 MPH because they can’t pay.

ATT listening to the consumer?

My question for the monopolists is that with their 10′s of billions of annual profit from U.S. market (re: Susan Crawford in the video link), when a little bit of network investment will provide plenty of capacity for the “Netflix bandwidth hogs”, why can’t they just sell me a better network product?
Also, why are the monopolists so afraid of Netflix? Netflix operates in an innovative, competitive market where consumer choice rules. If i’m not impressed with the Netflix product, I don’t have to buy Netflix in order to use the internet. I have scores of other choices there. For a broadband ISP, I have only Comcast or ATT and they both suck ( high price, low consumer choice ).