The two former Congressmen are the honorary co-chairs of Broadband for America. They opine: "Netflix's current pricing model allows unlimited downloads for $7.99 per month. Netflix saves, with every download, approximately 40 cents that would otherwise be paid to the U.S. Postal Service. If the average customer downloads 10 movies and TV shows a month, Netflix will save $4 a month for each of its 23 million customers. Obviously these massive transmissions over the Internet are not really free. Someone is paying for them. That 'someone' is the millions of broadband subscribers, whether or not they are Netflix customers. How is that fair?"
They continue their commentary: "Netflix argues that the marginal cost to the network providers of streaming a half-hour TV show to a residential customer is 'one penny.' This ignores the hundreds of billions of dollars in sunken network investments needed to create that one-penny marginal cost efficiency at the customer's end. If each of its 23 million customers downloaded one half-hour show per day and Netflix paid that one cent, that would be an increased cost to Netflix of $1.6 million per week -- or over $83 million per year."
More: "The reality is that Netflix and similar services want a free ride on the networks built with more than $250 billion in design, engineering, manufacturing, construction and maintenance -- a system that now provides broadband services to 95 percent of American households. Broadband networks are delivering more than just the latest sitcom episodes and hottest movies. They facilitate telemedicine, education, job training, telecommuting and many other functions. It hardly seems fair to make users of these services pay more in order to subsidize Netflix's costs of delivering their videos online. This call for a fairer pricing model and a more realistic long-term investment strategy has bipartisan support. In 2010, the FCC said government policy should not discourage 'broadband providers from asking subscribers who use the network less to pay less, and subscribers who use the network more to pay more.'"
Booker Rising response: Don't Netflix customers already pay for the broadcast networks, through our monthly broadband service fees to our Internet Service Providers? I also assume that Netflix pays for broadband service on its end as well?
JOHN SUNUNU & HAROLD FORD JR. COMMENTARY: Subsidizing Netflix
