'No free lunch': AT&T rejects Netflix CEO's call for free interconnection

By Marina Lopes

NEW YORK (Reuters) - AT&T on Friday dismissed Netflix's recent call for free interconnection as an arrogant and unfair attempt to force others to pay for the content provider to gain access to faster broadband speeds and better services.

"As we all know, there is no free lunch, and there's also no cost-free delivery of streaming movies. Someone has to pay that cost," Jim Cicconi, AT&T's senior executive vice president for external and legislative affairs wrote in a company blog post.

"Mr. Hastings' arrogant proposition is that everyone else should pay but Netflix," he said.

The post was a rebuttal to comments published by Netflix Chief Executive Reed Hastings on Thursday calling for greater protections for open Internet rules, also known as net neutrality, which require Internet service providers to give consumers equal access to all lawful content without restrictions or tiered charges.

In January a U.S. appeals court rejected federal rules that required Internet service providers to treat all web traffic equally, a decision that could allow mobile carriers and other broadband providers to charge content providers for faster access to websites and services.

In February, Netflix struck a deal to pay Comcast Corp for faster online delivery of its movies and TV shows through a practice known as interconnection, after customers complained about slow service.

Comcast is seeking approval from U.S. regulators for its proposed $45.2 billion purchase of Time Warner Cable Inc TWC.N. Treatment of internet traffic is one issue expected to receive scrutiny during the government's review.

In his original post, Hastings said internet service providers should give content companies adequate network connections for free, and singled out Comcast for supporting "weak" internet traffic rules.

Comcast responded by saying no other company had a "stronger commitment to openness of the Internet."

"While in the short term Netflix will in cases reluctantly pay large to ensure a high quality member experience, we will continue to fight for the internet the world needs and deserves," wrote Hastings.

On Friday, Hastings along with several large U.S. internet companies met with President Barack Obama to discuss changes to government surveillance programs.

Netflix did not respond immediately to requests for comment.

Hasting's argument would force service providers to pay for the increased capacity necessary to satisfy the growing demand for Netflix video streaming at the expense of AT&T's other customers, said Cicconi.

"If there's a cost of delivering Mr. Hastings's movies at the quality level he desires - and there is - then it should be borne by Netflix and recovered in the price of its service," he said.

(Additional reporting by Lisa Richwine in Los Angeles; Editing by David Gregorio)

[Image via Agence France-Presse]