Netflix's commercial arrangements with Internet providers are a bitter pill for the company to swallow. It's agreed to pay Comcast and Verizon so that its videos continue to stream smoothly to subscribers on those networks — but it doesn't have to like it. In fact, the streaming video service has made no secret of its hatred of those deals, arguing that they set a dangerous precedent that could see ISPs steadily jacking up rates, demanding payment from other companies, or even stifling smaller start-ups that can't afford to pay.
Now AT&T has joined the debate — not with a paid deal of its own, but with some strong language effectively telling Netflix to put up or shut up. On Wednesday, Jim Cicconi, AT&T's senior executive vice president for external and legislative affairs, said Netflix probably has a lot more leverage in its relationship with broadband companies than it's letting on.
"They've been able to get agreements that they obviously like with both Comcast and Verizon," said Cicconi.
When a reporter pointed out that Netflix keeps complaining about the deals, Cicconi brushed the objections aside.
"Then why on Earth would they have agreed to them? I think that's double-talk," he added. "No company that's in a for-profit business is going to act against its economic interests. Sure, any company would like to pay zero for services they need to deliver their business, but that's not a practical approach."
The implication is that Netflix is at least breaking even if not coming out ahead in its negotiations with ISPs. As I've mentioned before, it's hard to know the truth about this claim when the terms of the deal are still a secret. Netflix insists that the idea of payment was Comcast's. Netflix chief executive Reed Hastings said in March that he was only "reluctantly" paying the big ISPs and that it didn't signal anything about the company's resolve.
"We will continue to fight for the Internet the world needs and deserves," Hastings wrote in a blog post then.
Cicconi declined to say whether AT&T was pursuing a paid deal with Netflix for customers on its U-verse broadband service.