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Carriers Set To Explore Lifting Broadband Prices Due To Demand For Netflix

Carriers Set To Explore Lifting Broadband Prices Due To Demand For Netflix

iiNet chief technology officer Mark Dioguardi has confirmed that Netflix now accounts for 25% of iiNet’s traffic with some insiders telling ChannelNews that the carrier now regrets offering free Netflix trials. 

Before its Australian launch Netflix made up 3 per cent of iiNets total downloads this quickly rose 15 per cent after the first week that Netflix went on sales or was offered free as a trial in Australia.

Telstra has accused iiNet of not having the latest backhaul technology in place at their Exchanges to facilitate the demand for Netflix. 

Dioguardi told the CommsDay Summit in Sydney on Monday. “iiNet has suffered from some download problems caused by the service’s huge popularity amongst customers” he said. 

“We ramped up our core networks a lot – probably doubled it in the last 12 months,” he said. “About 70-80 per cent of our customers are on our own backhaul or dark fibre.

The huge increase in data traffic caused by Netflix is set to force Telco’s to change their business models and potentially raise their prices as they move onto the national broadband network the conference heard. 

“Of the 1800 [telephone exchanges used by iiNet to reach customers] a couple of dozen run on managed backhaul… and I’d like to drive that down to zero.” Dioguardi.

iiNet and Singtel-Optus are both offering quota-free downloads for users streaming Netflix. Mr Dioguardi said the first batch of customers using Netflix free of charge as part of a one-month trial would be forced to choose whether or not to pay for the service starting this Thursday.

Once that occurred, he said, the telco would have a better idea of how popular the service would be.

“We’ve had a few hot spots around the place because a small proportion of users [couldn’t handle the downloads],” he said. “We’ve been very open about that.”

Fairfax Media reported that iiNet executives had warned Netflix’s popularity was merely a taste of things to come once more customer used 4K televisions and other services.

A customer occasionally streaming 4K content on television would be forced to pay over $60 a month to get NBN services, he warned.

“We need to get real in our discussions on… NBN services,” he said, describing its charges as a ‘consumption tax’. “There’s massive work to do here on a unit cost basis.”

Communications Minister Malcolm Turnbull praised NBN Co’s use of hybrid fibre coaxial networks that are currently used to deliver Pay TV services and cable broadband earlier on Monday morning, adding it would be relatively easy to improve the speeds given to customers.

But Mr Dioguardi said Mr Turnbull was incorrect.