In response to a blog posted by Netflix on 20 March asserting that consumers should pay for Netflix regardless if they subscribe to the service or not, AT&T brought up some facts it believes everyone should agree upon and refuted Netflix's assertions.
First, AT&T said that the advent of streaming video is driving bandwidth consumption by consumers to record levels. As a result of the increased bandwidth consumption, service providers are having to drive more fibre into their network to create the capacity necessary to deliver those services to consumers.
Second, AT&T believes that it needs to be accepted that companies must build additional capacity to handle the surge in traffic. For example, if Netflix was delivering 10 Terabytes of data in 2012 and increased demand causes them to deliver 20 Terabytes of data in 2013, the company will have to build, or hire someone to build, the capacity needed to handle the new volume of traffic.
Lastly, if Netflix is delivering the increased volume of traffic to other companies, for example AT&T, then AT&T should accept that it must be prepared to build additional ports and transport capacity to accept the new volume of capacity as a consequence of Netflix's expanding business.
In its current structure, the increased cost of building that capacity is ultimately borne by Netflix subscribers. It is a result of doing business that gets incorporated into Netflix's subscription rate. In Netflix's view, that is unfair and those additional costs, results of Netflix's increased subscriber counts and service usage, should be borne by all broadband subscribers, not just those who use Netflix. However, AT&T believes that if there is a cost of delivering Netflix movies at a certain quality level, then it should be borne by Netflix and recovered in the price of its service.
