Hitting content providers with internet fees will hurt the web ecosystem
The writer is the COO of Netflix
Old arguments die hard. A decade ago, policymakers on both sides of the Atlantic were embroiled in a debate over who should foot the bill for the infrastructure that powers the Internet. On the one hand, telcos argued that content providers were “freeing up” their infrastructure and should pay more. On the other hand, a coalition led by civil society and consumer groups lobbied for an open and interoperable network. Eventually, internet fee plans were scrapped and “net neutrality” won the day.
Ten years on and we’re having the same conversation again in Europe, although recent history has shown that the interests of telecoms and content companies are actually aligned. Last month, the chief executives of 16 European telcos said the likes of Netflix would have to pay extra given the “significant costs now placed on European networks”. However, the use of the Internet is not determined by companies. traffic is generated by consumers paying higher prices for broadband packages precisely because they want fast, high-quality access to great movies, TV, games, and more. Far from costing phone calls, entertainment generates the demand that Internet Service Providers (ISPs) need to grow, which is why they bundle services like Netflix right into their consumer packages.
ISPs benefit directly from Netflix’s $15 billion programming budget. We have invested more than €4 billion in local productions across Europe over the past five years, creating tens of thousands of jobs in the creative economy. We will also invest more than €1.5 billion in European cultural levies and investment commitments over the next three years. Despite all the concerns about freeriding, it’s actually a mutually beneficial relationship that benefits infrastructure providers and entertainment companies economically, and in business terms it seems like the definition of “fairness”.
Our partnership with ISPs extends beyond Netflix’s consumer services to the underlying networks at the heart of this debate. We’ve invested more than $1 billion in our content delivery network called Open Connect, which we offer for free to ISPs. We have 18,000 servers hosting our content in 6,000 locations (and growing) in 175 countries. So when consumers press Play, the movie or TV show is streamed from around the corner, reducing traffic and costs for operators around the world, while providing the highest quality, lag-free experience for our members.
The dire predictions of the past decade that usage growth was unsustainable unless content providers paid more have been proven wrong; Internet traffic has increased tenfold, but operators’ capital expenditures have remained stable. It speaks of those Europeans The energy consumption of telecommunication companies is also predicted to remain flat over the next 10 years despite increasing traffic. how research by Analysys Mason (and funded by Netflix) concluded: “Increasing demand from end-users can be sustainably handled without increasing network costs over time.” This was confirmed by Europe’s telecoms regulators, who announced on October 7 that internet network infrastructure costs were “not very sensitive to traffic”.
A year ago, Squid Game: It premiered on Netflix and quickly became a global sensation. With 1.6 billion hours watched in its first month, this Korean drama has suddenly become our biggest TV show. We have had tremendous success Lupine from France and Casa de Papel From Spain. As consumers and broadcasters move from linear to on-demand, we want a system that encourages more investment in content and supports more hits like this, whether they’re on Netflix or France Television, Rai, Telecinco, On ARD, BBC or Viaplay. .
Internet charges offered by telcos today have no relation to the real costs of deploying infrastructure and will divert significant resources from European content, undermining entertainment companies, the appeal of higher-priced broadband packages and undermining Europe’s creative community.
Taxing entertainment and media companies to subsidize phone lines was a bad idea in 2012, and it’s still a bad idea today. We must move beyond the debates of the past and realize that when we work together, and both contribute to our respective strengths, we all prosper.