Earlier this month AT&T (formerly SBC) shocked Internet companies by suggesting that the telcos could start to charge content providers for delivery of rich media. This is a critical issue for media, Internet and telecom companies because of its potential impact on market power and profitability. Online movie rental company Netflix plans to offer movies for direct download, and is therefore an interested party. Here's what CEO Reed Hastings had to say about the issue on his Q4 earnings results conference call (full transcript) last night, in response to an analyst question:
...you asked a question about basically open access, which is a controversial issue now. You know, the FCC hasn't made any strong indication, are they going to legislature this particularly. I think you are seeing a lot of companies feeling each other out. To put the AT&T comments in context. They were not about the standard Internet, they were about their fiberoptics System (FiOS) to the home. So, but you will definitely see some battles around the Internet. Ultimately the consumer is going to decide, and if the consumer is buying high bandwidth broadband Internet from a company to be able to watch movies, then the deliverer of the Internet (network company) can't cut off access to the movies, because that's why the consumer bought it. I think the economics will work out very favorably, but it will be an interesting contested area over the next five years.