Suppose Netflix has profit P, and AT&T charges them X. Netflix has the option of not paying AT&T, which could cost them (P-X) and cost AT&T X. This gives Netfli

Suppose Netflix has profit P, and AT&T charges them X. Netflix has the option of not paying AT&T, which could cost them (P-X) and cost AT&T X. This gives Netflix leverage to get AT&T to lower the price. Actually going through with this threat costs both companies money, so they will likely work out a mutually acceptable division of profit without doing so. However, if one company thinks the other is bluffing, they may try calling the bluff. Also, this likely means more expansive for end users.