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Telecoms want ‘to put Netflix out of business entirely,’ Sen. Franken tells SXSW

By Stephen C. Webster
Wednesday, March 16, 2011 10:33 EDT
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AT&T ‘moving in a direction consumers don’t want to go,’ Netflix tells Raw Story

Appearing in a recent panel discussion at the South by Southwest music, film and technology festival in Austin, Texas, Sen. Al Franken (D-MN) warned that net neutrality, or the treatment of all data on a network as equal, was under threat by Comcast and other telecoms.

But the immediate prize for a company like Comcast especially, he cautioned, is “to put Netflix out of business entirely” by making it too costly to compete with the network owners’ video service.

Franken also discussed the recent scrape between Comcast and Level 3 Communications, which is an intermediary that works with Netflix to deliver video. Comcast demanded that Level 3 enter into a reoccurring payment agreement with them, or face being cut off from all Comcast subscribers.

And that type of corporate behavior is precisely what Franken repeatedly warned the SXSW crowd in Austin on Monday night.

“I came here to warn you the party may be over,” Franken said. “They’re coming after the Internet hoping to destroy the very thing that makes it such an important [medium] for independent artists and entrepreneurs: its openness and freedom.”

He warned that pay-walls may soon be erected to enhance the content of wealthy interests, ensuring some voices are heard over others and removing the level playing field of today’s Internet. Franken called this a new business model that telecoms like Comcast were keen on implementing, purely in the interests of making money.

He concluded by warning the crowd of technology professionals that some day soon, if the Internet is remade to serve only wealthy interests, everyone will be “stuck listening to the Black Eyed Peas and reminiscing about the days before you had to sell out to make it.”

Franken’s whole speech to SXSW was available on UStream. An embed appears below.

A call to Level 3 Communications was not returned by mid-morning Wednesday.

Bandwidth caps

Reacting to AT&T’s limited data subscription plans that charge fees if subscribers download too much information, the head of corporate communications for California-based movie rental service Netflix told Raw Story that the telecom has embarked on a lonely path.

“They do not seem to be moving in a direction that consumers want to go,” said Steve Swasey, vice president of corporate communications for Netflix. “Whereas, we at Netflix are very bullish on consumers’ rights.”

He refused to comment on the dispute between Comcast and Level 3, and would not say if Netflix or any of their partners had been approached by other network owners pitching similar schemes.

Swasey added, however, that only a small number of Netflix customers would be affected initially by AT&T’s data caps. “Most movies, like a DVD, are under two gigabytes,” he said.

AT&T’s data caps will limit customers to 150 gigabytes per month, which comes out to around a total of 90 minutes of Netflix viewing per day in any given 30-day period before an average user will exceed their limit and trigger a fee.

Once Netflix begins providing full-fidelity, 1080p video, the alloted time an AT&T subscriber could watch streaming videos will drop even further as each movie will require more and more bandwidth.

Though AT&T claims that most subscribers don’t come anywhere near 150 gigabytes of usage a month, they insists the changes are necessary to ensure everyone gets speedy access.

They also claim it will only affect 2 percent of their most plugged-in users, and that fees on the first three bandwidth violations will be waived.

Comcast already has data caps on its broadband services. AT&T’s caps begin May 2.

Both companies also have video rental services available to their cable television subscribers.

Netflix was the number one video provider on the Internet for the months of January and February, according to market study group NPD. The service topped out at 61 percent of all movies either downloaded or streamed online during that period.

Comcast was number two, at 8 percent.

This video is from South by Southwest, published to UStream on March 15, 2011, by The Uptake.

Watch live streaming video from theuptake at livestream.com
Stephen C. Webster
Stephen C. Webster
Stephen C. Webster is the senior editor of Raw Story, and is based out of Austin, Texas. He previously worked as the associate editor of The Lone Star Iconoclast in Crawford, Texas, where he covered state politics and the peace movement’s resurgence at the start of the Iraq war. Webster has also contributed to publications such as True/Slant, Austin Monthly, The Dallas Business Journal, The Dallas Morning News, Fort Worth Weekly, The News Connection and others. Follow him on Twitter at @StephenCWebster.
 
 
 
 
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