Verizon Public Policy on Netflix

Mikael Abrahamsson swmike at swm.pp.se
Mon Jul 14 05:52:12 UTC 2014


On Sun, 13 Jul 2014, Brett Glass wrote:

> My customers do not want me to "creatively" find ways to extract 
> additional money from them so as to cover expenses that Netflix should 
> be covering. Nor do they want me to subsidize Netflix subscribers from 
> the fees from non-Netflix subscribers. They want to pay a fair price for 
> their Internet that does not include paying ransom to third parties.

The Netflix users either have to pay to you, or they have to pay to 
Netflix. Now, if you're paying $20 per megabit/s/month then you and your 
users are victims of lack of competition in your area.

In properly developed places in the world with working competition, 
bandwidth prices are around $0.5-5/megabit/s/month. With those levels, you 
would have much less problem covering the cost of transit and your 
customers could use the service as much as they want because on margin, 
producing more bandwidth doesn't cost too much. At $20, I can understand 
that you're hurting. However, you paying $20 isn't Netflix problem. I 
don't see how Netflix could be re-imbursing you for your bandwidth costs, 
because it's not their fault either.

So, the real problem you should spend your energy on is why are you paying 
so much for bandwidth, not going after Netflix.

Since this is probably not something you can fix short term, I see no 
other option than to externalise your high margin cost to customers by 
imposing a monthly cap on usage and charging more for the people using the 
service more. You need to make sure your reveue model matches your 
expenditure model.

-- 
Mikael Abrahamsson    email: swmike at swm.pp.se


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