NBN Co's 'Netflix Tax' Idea Is Dead

Image: Universal Pictures

Remember that horrible NBN Co idea to "differentiate video traffic" and basically put net neutrality up for debate in Australia? It's properly dead, with NBN Co proposing to increase the data inclusions within the connectivity virtual circuit charges.

The proposal was quickly dubbed the 'Netflix tax', after news broke that NBN Co's consultation process asked resellers whether they would support "the development of a price response whereby charging of streaming video could be differentiated from the charging of other traffic/services". The internet naturally hit the roof, but NBN Co has since confirmed in the release of its pricing consultation paper it will instead focus on increasing the bandwidth of speeds offered in the connectivity virtual circuit charge (CVC).

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"While NBN investigated the possibility of lowering the price of video traffic by differentiating video traffic flows during the initial consultation, only two RSPs [retail service providers] supported the proposed initiative," the paper reads. "NBN has therefore elected to focus on ways to meet the challenge of growing video traffic by increasing CVC inclusions and making higher speeds more affordable."

In plain English, this means while the NBN Co put the feelers out there, public backlash and limited support for the idea meant it decided to file it away for the foreseeable future. In its place is a range of options including a more affordable NBN 100/20 plan at $58/month, which sacrifices 20Mbps of upload speed from the existing $65/month 100/40 plan on the market.

Resellers will still pay the CVC charge, but the amount of data included will be increased slightly. The CVC is a charge the NBN applies to resellers, like Telstra or TPG, in order for them to supply bandwidth to their customers. It's proposing to increase that bandwidth while maintaining the same cost (CVC charge) to deal with the growing need for data.

The Netflix Tax, as it was coined, came to light when iTNews revealed the NBN Co asked RSPs if it would be viable to treat video traffic differently from other forms of traffic. Apart from the obvious pricing implications — which NBN Co denied it was seriously considering at the time — the proposal also raised concerns about NBN Co bargaining away net neutrality, the principle that all internet traffic should be treated equally.

Later that month, Telstra released a scathing blog post about the state of the NBN and while it didn't mention the video streaming specifically, it had a lot to say about the service more generally.

"Wholesale broadband prices have more than doubled under the NBN and are set to go even higher. The consequence of this is that it's unprofitable for retail service providers to resell NBN at the current retail prices," Telstra's CEO Andrew Penn wrote. "Under the current NBN pricing these objectives, along with the overall sustainability of the industry, are increasingly at risk."

Penn recommended the NBN implement the following changes:

  • Removal of the separate volume-based pricing charge (CVC).
  • Simpler single-point pricing for the standard NBN speed tiers (50/20 and 100/40) with prices reduced by around $20.
  • Lowering of the price for superfast services (250 Mbit and up) to under $100.
  • Introduction of a $10 per month voice-only service.
  • Introduction of a wholesale price discount for targeted vulnerable and low-income customers in need.

Aussie Broadband also called on NBN Co to reduce the cost of plans beyond 100 Mbps. "We would actually like to see nbn develop additional discount bundles for the 150/100 and 250/100 speed tiers, as we believe there is a market for these speeds if the price was reduced," an Aussie Broadband representative told Kotaku Australia.

Outcomes from the NBN's consultation papers are expected to be announced this November.

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