On wireless networks – and NBN Co has a fixed wireless network that serves about 600,000 customers in rural and regional Australia – that can lead to congestion and a deterioration in the quality of service, which has led to questioning as to whether there should be some form of differential or congestion pricing to help shift and spread the demand for bandwidth away from peak periods for the networks. Loading For the network providers, they are faced with the challenge of funding ever-increasing capacity with little or no incremental revenues while seeing the streaming services capture the bulk of the returns from those investments. Moreover, the industry experience is that a small minority of users generally account for a disproportionate amount of the bandwidth, which means those users are potentially impacting the experience of the majority. A few years ago a Telstra executive said that a mere 1 per cent of the users on its wireless network accounted for 25 to 30 per cent of the data the network carried. NBN Co has a pricing model that charges retail service providers (RSPs) both for connecting their customers to the network and the amount of network capacity the RSPs acquire to service their end-customers.

The issue for its fibre and HFC networks isn’t so much one of its own capacity but the cost to the RSPs of acquiring sufficient capacity to deliver their promised speeds to their end-users in an environment where the growth rate in video streaming is exponential. Loading That accelerated growth in streaming services is potentially an RSP killer in a sector that already complains that NBN’s pricing leaves it with no margin. That prospect provided the backdrop for NBN Co’s question. The actual question NBN Co posed to the RSPs in its review wasn’t whether it should charge more for streaming services. "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?’’ it asked.

When it said "differentiated’’ it actually meant, apparently, "reduced". It wasn’t considering a Netflix tax but a "Netflix discount’’ to try to ease the pressure on the RSPs and help create a more robust and sustainable economic model for the sector, itself included. The discount plans it introduced last year, which halved the price of 50 Mbps services and reduced the cost of the 100 Mbps service for the RSPs were highly successful in encouraging consumers to take up higher-speed packages without killing off the struggling RSPs. The backlash to the misconception that NBN Co planned to tax streaming services was in the context of a long-standing and quite contentious debate about net neutrality. In the US the Trump administration last year repealed Obama-era legislation that blocked internet service providers from using differential pricing for different types of content, or blocking or throttling the speeds of particular users or types of usage. It handed unfettered discretion and power to the ISPs. So far, at least, the worst fears of those opposed to the deregulation of broadband in the US haven’t been realised.

Nevertheless, the potential for the ISPs to prioritise some traffic, presumably because they’ve been paid a premium to do so, or relegate or throttle the speeds of others because they haven’t been paid a premium or are absorbing too much bandwidth, remains. In the US the Trump administration last year repealed Obama-era legislation that blocked internet service providers from using differential pricing for different types of content. Credit:Carolyn Kaster NBN Co would be very aware of how charged any discussion about net neutrality in Australia would be, particularly as it is a government business enterprise with a wholesale fixed broadband monopoly. It would probably have never put the question into the review had it realised how it might be interpreted. Once it became aware of the backlash to the review’s question, NBN Co issued a statement in which it denied the review process was about levying extra charges on customers or introducing a Netflix tax.

It said it was seeking industry input as to whether RSPs believed video streaming was an issue that needed attention and, if it was, asking for suggestions about how to respond. The review is part of a rather lengthy process, undertaken behind closed doors – the discussion paper isn’t publicly available – with NBN Co waiting for responses from the RSPs before it develops a final position paper. It is likely that, by the time its informed views are put to the RSPs, the idea of differential pricing for streaming services will have been quietly shelved and NBN Co will focus on other approaches to tinkering with the structure of its packages that would encourage take-up of services with higher download speeds to accommodate the streaming services.