The ACCC thinks Netflix should help pay for our internet connections

Photo: Supplied

In its annual review of the telco sector, the ACCC has suggested that streaming services such as Netflix, Stan and Presto should contribute to telecommunications infrastructure due to the amount of data using them consumes.

The ACCC reported that in the year to June 2015, Australian internet use rose 40% on fixed broadband and 35% over mobile networks, with over 1.4 million terabytes worth of data downloaded.

That huge rise in data usage has been firmly blamed on the increasing consumption of streaming video services.

“The increase in demand for data is largely due to the popularity of audio-visual streaming services, including the introduction of subscription video-on-demand (SVOD) services such as Netflix, Presto, and Stan,” ACCC chairman Rod Sims said.

His suggestion to ease the congestion, especially with fixed data growth expected to increase by 180% between 2014-2019, is for telcos to implement congestion pricing and invest more in their networks to improve capacity. And that investment, he suggests, should come at least partially from the pockets of the streaming video services.

“As much data growth has been a result of increased use of over-the-top SVOD services, operators may look to new ways of providing their own content services, or seek contributions from OTT providers to expand network capacity,” the ACCC said.

“Network operators may also seek to pursue partnerships with OTT and content service providers in the coming years.”

At the same time, the ACCC accused the telcos of being shortsighted and not prepared enough for the streaming revolution.

It’s a topic that’s caused huge debate in the US, leading debates around things such as net neutrality, where services that pay the internet provider will get priority on the network.

Netflix, which is by far the world’s largest streaming service, is firmly against such a thing and believes it has its own solution called Open Connect.

We wrote a detailed story on Open Connect earlier this year, but to summarise it: there’s at least one Open Connect server with Netflix’s entire library of shows in every state for every major internet provider.

The point of it is to help reduce load on the network, as well as making it cheaper for internet providers to handle congestion on their networks.

If the content comes from as close as possible to the person watching it, the less strain it can cause on the network, which means everyone’s connection shouldn’t slow down when the whole neighborhood is watching “House of Cards”.

There’s also the argument made by many, including Netflix, that the ISP doesn’t share its profits with Netflix made from users who sign up to higher data plans so they are able to use the service.

Optus has been a strong advocate for some form of net neutrality the past, or at least for Netflix and other services to pay for decent connections.

Speaking at the CommsDay summit last year, Optus CEO Allan Lew indicated that the ISP would charge over-the-top services like Netflix, Presto and Stan to ensure customers received “the best experience”.

NOW WATCH: Tech Insider videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.