Net neutrality debate stirs in Australia

Anthony Caruana
21 April, 2015
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With iiNet and Optus offering six months of free access to Netflix, complaints across the country regarding degrading Internet speeds, the collapse of a fiber to the home NBN and our continuing thirst for faster Internet speeds, a new debate is looming.

Net neutrality is the idea all services on the Internet should be treated equally. In essence, traffic for a service that can work at lower speeds, like email, is directed at the same speed as traffic for a service that requires much lower latency, like video streaming.

In terms of service delivery, it’s clear one service relies on faster speeds than the other.

The challenge comes in paying for better service. If the Internet ceases to be neutral service providers like Netflix would have to pay (or could choose to pay) to have their service prioritised over other services.

In an extreme example, a telecommunications provider could prioritise their streaming service so that it performed better than a rival or they could price competitors out of the market.

One thing that is clear is, ultimately, customers pay as any extra costs are passed on.

At a conference last week Optus CEO Allen Lew said services such as Netflix, Stan and Presto should be prepared to pay Optus. “We will continue to preserve net neutrality but we’re talking about the possibility … [of delivering] a premium service that we as a network provider can ensure to a provider if they pay for that premium service,” Mr Lew said.

In other words, all traffic would be treated equally except for traffic generated by providers who are prepared to pay a premium.

That doesn’t sound neutral from where we’re sitting.

What’s interesting is understanding the ownership of some of the streaming companies offering services in Australia.

Stan is owned by Fairfax and the Nine Network

Presto is owned by Foxtel (which is a 50% Telstra and 50% News Corp) and Seven

Quickflix is listed on the ASX with the Nine Network being the largest shareholder

Netflix is a public company listed on the NASDEQ

FetchTV is 40% owned by Malaysian parent Astro, and is sold through Optus and iiNet

In other words, there are lots of vested interests with old media companies and telecommunications providers involved.

Most of the net neutrality battle will be fought through the vested interests of companies such as these. But the impacts are much broader.

Access to fast, reliable broadband is an important tool for new companies trying to establish new and innovative services. Companies like Netflix would never have made the inroads they have without unfettered access to our Internet connections.

More broadly, we are not far from telehealth and remote education services being ubiquitously available to everyone over the Internet. Will you choose the best doctor for your needs or the best doctor who can afford to have their service prioritised over the Internet? Or the best teacher?

If telecommunication’s providers are allowed to charge users of their networks for prioritised access then a barrier for entry into markets will be established and end users will pay. Neither of those seem like reasonable outcomes.

We understand the needs of network operators to cover the cost of delivering bandwidth. Perhaps building a modern network equipped for the future is the way forward. However, the current government has made it clear that this isn’t a priority.

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