iiNet CEO Warns NBN Must Be Cheaper To Keep Up With Netflix Demand

Australia loves Netflix. Almost too much, in fact according to iiNet's CEO David Buckingham.

The service's arrival in Australia has heralded an explosion of data being sent over our broadband networks that caught our ISPs by surprise. Now they're racing to catch up. iiNet's CEO David Buckingham believes that the National Broadband Network can help with the load, but argues it's too expensive to do so right now.

Speaking with Fairfax, iiNet's Buckingham said that it's too expensive to send the amount of data required for HD Netflix streaming over the NBN right now due to high wholesale costs.

Without lowering the costs of the NBN for wholesale providers, local ISPs may be forced to up the prices of their plans to make up for the increased cost of doing business over the new fibre.

Lowering the wholesale cost of the NBN is a proposal fraught with its own set of issues, however. A cheaper wholesale price means that the NBN's profit forecasts may be dramatically lowered, taking much-needed money away from the Federal Budget.

Regardless of the dollars and cents on paper, Netflix is slowly crushing Australia's ISP industry. Buckingham added that the arrival of Netflix blew the Australian ISP industry's network capacity forecasts out by a year, and local players are now racing to keep up.

Netflix CEO Reed Hastings told us earlier in the year that if he had his way, local ISPs wouldn't sell their plans based on data caps, but instead on speed tiers.

"There’s no reason for data caps. We want to make the internet unmetered. Period. The capped model is antiquated: we want to make it about speed. 10Mbps will cost more than 1Mbps and 50Mbps will cost more than 10Mbps and that makes sense. Historically, there was so little content in Australia that many users went over the international links and those are pretty expensive, but now there’s more and more content and content caching in Australia," he said.

He added in the pre-launch periods that he’d certainly like to see Aussie ISPs drop data caps altogether, but laughs that "they don’t really care what [Netflix] feel."

Have you noticed a slow down in your data service since Netflix launched? Tell us in the comments.

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