Netflix CEO: “Cost sharing makes no sense”

The co-founder and CEO of video service Netflix, Reed Hastings, has said that sharing costs with internet services providers “makes no sense” for the firm.

Hastings took to the Netflix blog in a bid to support net neutrality in the US,  criticising the nation’s larger ISPs for charging “potentially escalating fees” to over the top (OTT) service providers to ensure quality of service on access networks. He noted that ISPs often cite the burden that OTT service providers place on their networks, but argued that it is not rational for OTTs to supplement ISPs’ costs.

“ISPs sometimes point to data showing that Netflix members account for about 30 per cent of peak residential internet traffic, so the ISPs want us to share in their costs,” said Hastings. “But they don’t also offer for Netflix or similar services to share in the ISPs revenue, so cost-sharing makes no sense. When an ISP sells a consumer a 10Mbps or 50Mbps internet package, the consumer should get that rate, no matter where the data is coming from.”


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Hasting also criticised large ISPs for “extracting a toll because they can”, as they control internet access for millions of consumers. He also accused them of “sacrificing the interests of their own customers to press Netflix and others to pay.”

“Though they have the scale and power to do this, they should realize it is in their long term interest to back strong net neutrality,” he added.

Hastings also stated that in the short term, Netflix will, in cases and reluctantly, pay large ISPs to ensure a high quality of service for its customers. However, he warned that the company will continue to fight for net neutrality.

In January, Netflix warned that it “would vigorously protest and encourage [its] members to demand the open internet”, should a threat to net neutrality surface. The threat came in the wake of US operator Verizon’s successful challenge to the FCC’s open Internet Order.


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