MWC 2023: Netflix pushes telcos back on net neutrality line

Video leader Netflix has hit back at telcos and politicians in what can only be a net neutrality battle over who will foot the bill for developing the next-generation communications infrastructure that European businesses and homes rely on.

This comes less than a week after the European Commission (EC) outlined a series of proposals, including a regulation designed to introduce new rules to enable the deployment of faster, cheaper and more efficient gigabit networks across the European Union.

On February 24, the EC published a new set of regulations consisting of the Gigabit Infrastructure Act and the draft Gigabit Directive, which aims to provide guidance to national regulatory authorities on the conditions for operators with significant market power to access telecommunications networks. , promote faster decommissioning of legacy technologies and accelerate the deployment of gigabit networks. The announcement was generally welcomed by the communications industry, particularly the Mobile World Trade Association GSMA:.

Just three days after the opening of MWC, the world’s leading mobile trade show, EU Internal Market Commissioner Thierry Breton joined Telefónica President and CEO José María Álvarez-Palete to see how AI has enabled innovation to change. , 5G and augmented reality have set the industry on a new trajectory that is both comprehensive and inclusive, and who will pay to create this brave new world.

Breton welcomed the new world and Europe’s prospects, but warned that despite the huge progress made in European communications, the region’s current networks are not fully prepared for the expected increase in traffic due to the growth of programs such as immersive experiences and the like. video stream.

Continuing his theme, Breton made it very clear that the funding required to build these next-generation networks must involve all actors in the ecosystem, particularly tech giants such as Google, Meta and Netflix, whose services have been a key driver. . this increase. For his part, Alvarez-Pallette demanded that all stakeholders should pay their “fair share” when it comes to building tomorrow’s infrastructure.

A day later, going up on the same stage, Netflix: CEO Greg Peters defended the companies’ role as his game, arguing that the subscription TV and movie company’s content is getting people to pay for better broadband services.

Mwc 2023 mobile world congress netflix joe ohalloran
Netflix CEO Greg Peters argues that good video content drives people to subscribe to better broadband services, thereby paying for network development through their subscription fees.

In his keynote address, Peters countered that the increased demand for the Internet has not caused the increase in traffic costs. He said there is a very clear and true symbiotic relationship between a thriving creative industry and a thriving Internet ecosystem, and that’s because people want to watch great movies and TV shows and are willing to pay for high-quality Internet service to enjoy them. content they love.

“I know there are some here today who are concerned that this consumer demand is leading to unsustainable growth in Internet traffic. These concerns are not new,” he told the MWC audience.

“I remember being here in Europe about 10 years ago, talking to our partners and regulators about the same concerns, but the last decade has shown, and telecom executives have recently confirmed, that the growing use of the Internet is actually a huge opportunity. It reflects the growing demand for the services we all provide together,” Peters added.

“Of course, increasing usage requires investment. For our part, Netflix has invested more than $60 billion in content over the past five years. This is equivalent to approximately 50% of our total revenue during that period. That’s the role we play in creating this virtual, slightly better, more diverse content, which leads to more people willing to pay for better broadband services.”

Moving on, Peters said that as national broadcasters switch from linear to streaming services, Netflix wants to create a system that encourages more investment in the hit video service, but taxing content companies would be detrimental to the network’s growth. He described such payments as a double blow for the industry.

“Some of our ISP partners have proposed taxing entertainment companies to subsidize their network infrastructure. But as Commissioner Brereton said yesterday, and as I strongly believe, it should not be a binary choice between the big telcos or the entertainment companies,” he added.

“This is because such a tax would have a significant negative impact. This will reduce investment in content, which hurts local creative communities. That hurts the appeal of high-priced broadband packages and ultimately hurts consumers.

“However, as broadcasters continue to move away from linear to streaming, they will also begin to generate significant amounts of Internet traffic…Broadband customers who contribute to this increased usage are already paying for network development through their subscription fees. That’s the service they buy when they sign up with an ISP. Requiring entertainment companies, both broadcasters and broadcasters, to pay more on top of that would mean that ISPs are effectively charging twice for the same infrastructure… There is no suggestion that these charges will be passed on to consumers in the form of lower prices. or better infrastructure”.

In making his case, Peters pointedly pointed out that Netflix’s operating margins are significantly lower than those of British Telecom or Deutsche Telekom, and that Netflix could “just as easily argue” that network operators should pay entertainment fees. companies to help value content. what happened under the old television model;

Peters suggested that a better approach for entertainment companies and operators is to focus on what they both do best, and through that create a “rising wave that lifts all boats.”

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