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Netflix’s CEO is worried about what AT&T’s merger means for the internet

October 25th, 2016 at 6:32 PM
Netflix data usage

Netflix and AT&T/Time Warner are set to go to war. Fresh from its $80 billion takeover of Time Warner, AT&T has announced an internet-only streaming service, DirecTV, that is aimed squarely at Netflix subscribers.

That would always be seen as a threat by Netflix CEO Reed Hastings. But after AT&T’s takeover of Time Warner, the company now owns big-name content producers like HBO and CNN, and the internet pipes that deliver those to the consumer. That’s a dangerous combination.

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Speaking at the Wall Street Journal’s WSJD Live conference, Hastings outlined his concerns. “We want to require that for AT&T customers, that HBO and Netflix are treated the same. Now that they’re going to own HBO we think that any special treatment for HBO data would be inappropriate, but I think that’s pretty basic.”

Hastings is talking about net neutrality and “zero-rating” data, a practice that is already creeping into some mobile carriers. Services like T-Mobile’s Binge On exclude certain video and music streaming providers like YouTube and Netflix from counting against your data cap, provided that those streaming services work with T-Mobile to provide mobile-friendly streams.

Obviously, this gives an advantage to the services that partner with T-Mobile. As a customer, you’re more likely to watch a video on YouTube than something else, is if doesn’t count against your data limit. T-Mobile’s program is pushing the boundary of fairness, but at least it doesn’t charge services for access, and is open to any streaming service that wants to work with T-Mobile.

What could be much worse is if an internet provider, like AT&T, offers preferential access or zero-rated data to a content provider, such as Time Warner. Doing so goes against the idea of net neutrality, which states that internet providers are not allowed to discriminate between different kinds of data. There’s obvious incentives for AT&T to favor Time Warner channels on its network, and doing so would put Netflix (and everyone else) at a serious disadvantage. That’s what Hastings is worried about.

But apart from ensuring AT&T/Time Warner play by the rules, Hastings doesn’t appear to be fazed by the merger. He said that it would now be easier to recruit Time Warner execs, which could help Netflix get more content for its platform.

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