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Major Aussie Telcos Want Netflix & Others To Pay For Streaming Infrastructure

According to major Australian telcos like Telstra, Optus, and TPG, the federal government to assess streaming businesses such as Netflix, Google, Amazon, Meta, and Microsoft to see if they should help bear the cost of the infrastructure that delivers their content.

All three of the biggest telecommunication companies shared with The Australian Financial Review that they are lobbying to put the cost of building and maintaining infrastructure to stay ahead of massive demands of streaming services, with some telcos saying companies like Netflix are getting “free ride”.

“We have a situation now where the companies carrying by far the biggest amount of traffic on the digital superhighways, don’t actually pay anything,” Optus vice president of public affairs Andrew Sheridan said.

“We are subsidising them, and it is an odd situation because traffic [has] risen five-fold in the last five years, and yet revenues have been declining.”

Also raising his concerns with other telcos, TPG’s general manager of external affairs, James Rickards, said they are “providing the backbone of our digital society,” which costs a pretty penny to maintain and update. At the same time, big tech continues to rake in profits.

“Tech giants and streaming companies continue to profit from every connection we provide, without the burdens of infrastructure ownership or regulatory responsibilities,” Rickards said.

In other countries like South Korea and Europe, he said he has seen these nations attempt to address the growing cost of 5G networks and fixed broadband infrastructure by subsidizing streaming providers and technology companies.

According to internal Optus slides verified by The Australian, telco traffic has quadrupled over the last five years. Still, revenues have deteriorated, which could have grave implications for the nation’s telecommunications networks businesses.

“It’s like on toll roads today, semi-trailers pay more than car drivers because they carry much bigger loads on the road and they put more strain on the infrastructure,” Optus’ vice president of regulatory and public affairs Andrew Sheridan shared with The Australian.

“We have the digital highways, and we’re asking consumers of broadband services to cover all sorts of costs in those networks, and the big digital content providers don’t pay anything.”

Additionally, he said that despite the huge growth of traffic on the networks, telcos had been impacted negatively instead of positively because of their inability to monetise the growth.

To help offset the cost of telecom infrastructure in the UK, the government established a Digital Services Tax in 2020, which tasked big tech companies providing digital services to pay a 2% tax on the revenues.

As reported by the Financial Review, Telstra chief executive Vicki Brady said Telstra was not aggressively chasing the officials to interfere with making streaming platforms to subsidise a portion of the costs of the infrastructure but instead would like commercially agreed upon arrangements with big tech companies.

“We are watching closely, and I speak to my peers in other parts of the world, particularly in Europe, [but] I think it is a very different conversation,” Brady said.

The Australian government is aware of the stance of local telcos, according to Communications minister Michelle Rowland.

“The Department of Infrastructure, Transport, Regional Development, Communications and the Arts has been monitoring developments in the EU, and is analysing the European arrangements in detail, as well as approaches being considered in other jurisdictions,” Rowland said.

Netflix could not be reached for comment, but earlier this year at a conference, Netflix’s co-chief executive Greg Peters the streaming giant aided telecom companies by delivering infrastructure to store its content locally instead of streaming from foreign lands.

“Broadband customers, who drive this increased usage, already pay for the development of the network through their subscription fees. Requiring entertainment companies – both streamers and broadcasters – to pay more on top would mean ISPs effectively charging twice for the same infrastructure,” Peters said.

Peters’s response indicates that the money for the supporting telco infrastructure must come from somewhere and that their users are already paying a percentage to do just that.

Whether Telcos continue to pay for upgrading streaming infrastructure or if tech giants have to shoulder some of the bill, either way it looks as though consumers might see an increase in their premiums and bills sometime in the future on both fronts.



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