NBN is not introducing a “Netflix Tax”

It is not often I jump to NBN’s defence, however on this occasion I am going to. I should also point out that I do not speak for NBN in anyway.

It has been reported in ITNews and elsewhere that NBN is considering introducing a “Netflix Tax”, meaning an extra charge on streaming services. This is simply not true.

NBN is undergoing a pricing review. This is being held behind closed doors with their direct customers, the RSPs, and a number of other interested stakeholders, such as the ACCC, ACCAN etc. It is an iterative process with an initial list of ideas to stimulate discussion. Having received feedback (verbally or via written submissions), NBN will then further develop those ideas that seem good, produce a new list and get further feedback, before coming up with a final position paper. This is expected to take many months.

While I understand that everybody wants to know what is going on, it is behind closed doors because that allows everyone involved to speak freely, come up with a whole plethora of ideas, some of which may be very bad, but can be the launchpad for further much better ideas.

In my opinion, if there is one thing NBN needs right now it is some radical thinking, some radical ideas about how it can expand it’s market share, or provide higher quality, higher value services to Australians. To have these ideas enter the public debate too early, is detrimental to this process.

So the idea that has got everyone worked up about is this:

“Would your organisation support the development of a price response whereby charging of streaming video could be differentiated from the charging of other traffic/services”.

The key word here is “differentiated”. NBN is not looking to charge more for Netflix, indeed, after conversations with the author his intention was that the price of Netflix traffic be reduced.

The reason it is a lively subject is that NBN like every other bandwidth provider in the world is seeing the growth in streaming traffic overwhelm everything else on the network. NBN charges RSPs for bandwidth using the CVC construct and many RSPs have been complaining that streaming services are killing them.

NBN’s thinking is if they were to find a way to reduce the price of this traffic, then it would alleviate some of this RSP stress.

For the record I think it is a bad idea because as others have pointed out it fires up the whole Net Neutrality debate. I will be giving that feedback in our submission to the Pricing Review. Frankly I doubt this idea will make it into the second stage.

In our submission we will also be putting forward some of our own ideas about how we can increase the takeup of ultra high speed services (250Mb and above). I use the word “ultra” because NBN has already described the 100Mbps speed as “high speed”, which I find rather cute. Some of those ideas may well be considered by others as crazy and will not be taken up. That is the process.

Just as an aside one of the debates that has come up around this in the USA is whether RSPs should charge Netflix etc for sending traffic into their network. Accusations around “double dipping” (charging both the subscriber and the content provider for the same traffic) have abounded. 

However there are some companies, primarily Telstra and to a lesser extent Optus & TPG, who already do this. They do charge (either directly or indirectly) Netflix to send traffic to their subscribers via their IP Transit charges. All the other RSPs allow Netflix to send traffic onto their network for free via “peering”. However Telstra and the others refuse to peer. The big four (Telstra, Optus, TPG & Vocus) are forced to peer with each other by the ACCC, but nobody else.

Also for the record, we have found Netflix exceptionally good to deal with. They provided us with some caching (technically they are content servers) to install in Hobart which have enabled us to continue to grow our network in Tasmania despite the very high backhaul charges.

Damian Ivereigh
3rd July 2019