AT&T's de la Vega: Netflix, other video players should pay for traffic costs - not consumers

AT&T Mobility (NYSE:T) CEO Ralph de la Vega waded into the fraught debate over whether Netflix should be forced to pay to interconnect its video traffic to subscribers. Speaking Tuesday at the Rutberg Global Summit in Atlanta, de la Vega said that video is driving exponential traffic growth. "We have to provide additional capacity," he said, according to CNET. "The only question is who pays for that addition?" He asked, should everyone pay for it, or should Netflix?  Netflix CEO Reed Hastings' recent blog post supporting stronger net neutrality and chiding broadband ISPs elicited a response from Jim Cicconi, senior vice president of external and legislative affairs for AT&T, who called Hastings "arrogant" for suggesting "everyone else should pay but Netflix."

Rajeev Chand, a managing director and head of research at Rutberg, asked de la Vega if metered broadband might be the solution, with carriers charging heavy users more to defray the cost of capacity upgrades AT&T needs to handle more streaming video traffic. According to GigaOM, de la Vega said that  "the pricing models for the customer should be separate from the backbone."

At the conference, de la Vega also said that U.S. consumers have it pretty good in terms of pricing, since the cost of a megabyte has declined by 93 percent since 2008. He also said the price per minute for voice is 3 cents, the lowest rate among developed markets. SoftBank CEO Masayoshi Son has argued that there needs to be greater competition in the U.S. wireless market, which is why he would like to combine Sprint (NYSE:S) with T-Mobile US (NYSE:TMUS). De la Vega said he did not think regulators would approve of such a deal, and that not much has changed since AT&T tried and was blocked in its effort to buy T-Mobile in 2011. "Four isn't an unreasonable number," he said. "I think the debate will continue." Article

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