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Netflix CEO: Broadband caps are a money grab by ISPs

Even as more and more Internet access providers put in data caps for their customers' broadband service, the head of the movie and TV show streaming service Netflix is trying to tell US lawmakers and Canadian regulators that such caps are merely money grabs by those ISPs. GigaOM reports that Netflix CEO Reed Hastings wrote a letter to US House of Representatives members Fred Upton (R-Mich.) and Henry Waxman (D-Calif) to explain his views.

The letter included a report that was commissioned by Netflix for Canadian regulators that tries to dispel the belief given by ISPs that when tons of their customers stream video and TV shows via Netflix it costs the ISPs lots of extra money. In fact, the report states that "the average incremental cost of Internet traffic by 'heavy users' is likely 1 cent or less per GB.". In his letter to the US lawmakers, Hastings states, "Moves by wired ISPs to shift consumers to pay-per-gigabyte models instead of the current unlimited-up-to-alarge-cap approach, threatens to stifle the Internet.”

This week AT&T put into place some very stringent broadband caps on their DSL and U-Verse customers. DSL subscribers reach their cap after just 150 GBs while U-Verse customers reach the limit after 250 GB caps. Moreover, AT&T is now charging overage fees for customers that go over those caps to the tune of $10 per 50 GBs. That's 20 cents per every extra GB, well beyond what Netflix's report says the actual price cost to ISPs really is.

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