Perhaps we should be considering a Netflix Tax?

Oh don’t worry, I’ve seen the headlines, I’ve read the articles – I’ve seen the online outrage.  How dare the NBN consider a tax on streaming right?

Spot on, but perhaps we need to have a conversation about a “Netflix Tax”?

Here’s the quick background.  As part of a wider consultation with the internet service providers (NBN calls them RSPs – Retail Service Providers) about the future of NBN’s wholesale pricing model, and as one of many questions asked – the NBN posed this to the RSP’s:

“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? Would your organisation be likely to productise such a mechanism if developed by NBN?”.

This was first reported by CommsDay, and from there has been drawn out and commented on a heck of a lot.

Personally, I don’t see it happening.  I doubt it will get past the next hurdle.

However, I think we need to have a conversation about the impact Netflix’s business model has on the core infrastructure of our Internet.

Sadly, we didn’t get the rolled-gold top line NBN that was first envisaged.  Fibre to the Home to all homes might have meant a different conversation right now – but that would have blown the budget, and the then Turnbull Government nixed that for a “Multi Technology Mix” which is close to completion.

What that means is we have a bunch of people with Fibre, plenty with HFC (the old Pay TV cable), a bunch with the newer FTTC (Fibre to the Curb/Kerb) technology and the rest, well, they’ve got a mix of FTTN (the bulk) as well as Fixed Wireless and Satellite.

To put that in perspective, 6.1 million homes are due to get what I’d call the best NBN options available – Fibre to the Home, Fibre to the Curb and HFC – all of which are easily capable of the NBN’s current top speed tier of 100mbps, and have upgrade paths of much more.

There are though 4.6 million homes on Fibre to the Node, of whom probably half a million at least would be down the lowest end of the speed spectrum, along with around a million on Fixed Wireless and Satellite.

Whatever you think about the NBN, there’s no doubt that the next step after completing the roll-out is to work on a path to upgrade as many of the lowest speed homes possible.

While NBN Co may be on track to reach profit in the coming years, that small profit won’t be enough to fund the complete upgrade path for the vast majority.  And there ain’t no government going to propose additional NBN funding for the upgrades.

And why do we need upgrades?  Because we’re streaming so much.

Easily 15% of all global Internet Traffic is Netflix.  Add onto that YouTube, Facebook Video, Amazon Prime, Stan and the new ones yet to launch as well as our own catch up TV services – the internet traffic from streaming is only going to grow.

For much of history TV and Radio broadcasters paid a licence fee to get access to the spectrum they used to broadcast, that changed two years ago when the government repealed those parts of the Broadcast Act to “level the playing field” a bit between Broadcasters and the Streaming disrupters.

The caveat there is that Broadcasters are still required to invest heavily in Australian content, and kid’s content – much of the time these investments are not commercially viable, they are just ticking that content box.

Aussie streaming service Stan (Owned by Nine Entertainment) is investing in Aussie content, making Australian shows and even exporting them to the world – but what is Netflix doing?

There’s literally no financial benefit to this country in having Netflix grow.   And that’s fine – but aren’t they taking us for a ride? 

Our taxes built the network we use to access these services, yet they’re barely paying any tax here – and they’re not making Aussie content so there’s no great rush of jobs being created by the power of Netflix.

I’m not going to get into a net neutrality argument here, because while similar, I see them as different issues.  But, I acknowledge the thin end of the wedge that exists here.

If Netflix and streaming is a contributing factor to the issues being experienced by internet users – shouldn’t we be having a conversation about it?

While the many who argue it’s not are probably on the better style of NBN, we need to think about the million or more people who are rightly entitled to a bit of clarity around the upgrade path for their internet and because most of you won’t want to consider having the government tip in more cash – just how are we going to pay for it?

We either tax Netflix users directly, or across the board there’s some levy imposed on internet users.  We’ve just got to start talking about it instead of just running with knee jerk reactions.

Hit me up on Twitter or Facebook with your views!