Should Streaming Sites Fund Broadband Expansion?

John Lister's picture

Netflix has rejected proposals that would help fund network infrastructure by companies responsible for large amounts of Internet traffic. It says the European idea would effectively mean customers paying twice for the same technology.

Officials in Europe are currently consulting on the proposals. The idea is that companies which deliver the most traffic would pay a tax with the proceeds going towards projects to expand and improve Internet connections.

The officials argue that companies such as Netflix benefit from the wide availability of Internet connections, but don't currently contribute towards the cost. On the other hand, they do pay for their own Internet connections and data storage.

Six companies (Amazon, Apple, Facebook, Google, Microsoft and Netflix) are reportedly responsible for almost half the data sent over the Internet. Netflix is now the leading deliverer of online video, which makes up around two-thirds of all Internet data.

Netflix Says Tax Is Double Dipping

As you'd expect, Netflix is not a fan of the proposals and makes several arguments against them. The first is that broadband customers already pay their Internet providers. Netflix co-CEO Greg Peters says any taxes on Internet content companies would be passed on in higher subscription costs, meaning customers effectively paid twice for Internet infrastructure.

Peters also argues the tax would quickly become controversial. He notes that while Netflix creates a high proportion of Internet data right now, TV viewers only spend around 10 percent of their time watching the service. More than half comes from traditional broadcasters who are gradually moving more of their content online and so would theoretically come under the proposed tax at some point. (Source:

He also noted that Netflix has already invested more than a billion dollars in technologies to reduce the amount of data customers use in streaming shows. (Source:

Net Neutrality May Nix Idea

While Netflix certainly isn't offering an impartial view, the proposals could also fall foul of the net neutrality principle that's recognized in European laws and regulations. The principle says all Internet traffic (other than illegal content) must be treated equally.

That means, for example, that an Internet provider couldn't slow down or block Netflix traffic or make customers pay a higher fee. On the other side, a strict interpretation means mobile data plans with a data cap shouldn't be able to exclude Netflix streaming from counting towards the cap.

In this scenario, governments could be breaching the net neutrality principle by making Netflix and company pay more to deliver data than smaller sites and services.

What's Your Opinion?

Should companies responsible for large amounts of Internet traffic contribute towards Internet infrastructure? Is a tax the best way to do this or will the cost simply pass through to customers? Is it best to simply let the free market decide when and where to build Internet connections or is it more important for society that everyone can get affordable access?

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Dennis Faas's picture

I've noticed that major news networks are posting their content on Youtube. This became more apparent after the Russian invasion of Ukraine. It's convenient for me to get news from Youtube because I can scroll through the headlines and cherry pick what stories interest me, rather than sit through a 30 minute telecast with only a handful. Besides that, Youtube learns what you like to watch and often presents related information following what you just watched. I see no reason to want or need to pay for television unless there is a need for local news - but even so, it's usually available over the air using a digital antenna if needed. I also use Amazon's Alexa to play local news over Internet radio just by saying "Alexa, news flash" (otherwise known as "flash briefing").

russoule's picture

I'm not sure what Dennis is trying to say about news on Youtube since most news organizations have their news on-line at their own sites.

But here is another situation where the various governments are decising "the people need free internet capability" and are trying to fijance it by a "tax", this time the "Tax" is going to be included in the streaming services fees. If this availability is soimportant, then let's have a GENERALTAX assessed against the GENERAL PUBLIC, similar to the taxes that provide a park or zoo or museum. Of course, that is a very unfair system because not everyoine USES the park, zoo or museum and yet must pay for it. A much better solution is to forget about "free for the public" bs and let the users pay via the marketplace, which they already do when paying their monthly ACCESS FEES.

olds97_lss's picture

All those services will just increase the rates to us, so then we end up paying for our internet twice. With comcast... I feel like I'm paying for it 2 or 3 times already. lol!

matt_2058's picture

Think about this. To solve traffic congestion, it would be like taxing the auto MFGs for producing more cars. Everyone pays sales taxes which support roads to a certain degree and auto owners additionally pay registration fees and fuel taxes to support roads. Why would it make sense to levy a cost on the auto MFGs?

The one thing I can't see in this issue is why all the costs have to be passed on to the customers penny-for-penny. Corporations these days make enough to fund these things. Recently a petroleum announced record profits. No wonder how that was accomplished. Definitely not by more efficient processes or better budgeting.

Even though Netflix's opinion is biased, I don't think there isn't an unbiased one out there.

I'm with Netflix on this. We already pay ISPs for service and general access. It looks like the ISPs don't want to be the bad guy in this by upping their prices to provide the services, so they go to blaming the users: me, you, and Netflix.

rhcconsulting_14541's picture

Bill C-18 is supposedly going to support the news in Canada by taxing links. The government says it is going after Facebook and Google, but it is a link tax that eventually will focus on regular websites. The government is already working on legislation that can remove your Internet access in secret without providing any reason.

I find it interesting that Netflix is the fall guy here. What about Disney and the dozens of other streaming services , all of which have managed to get us to pay monthly fees to access content that used to be a one-time fee in the days of DVDs.

bern's picture

Domestic Internet connections are already charged by speed and/or total usage. This effectively controls a customer's total usage. It is then up to the ISPs to fund the backbone to support the QoS they deliver to customers.

Most domestic customers are predominantly consumers of downloaded data, providers are upload providers. To an extent, they balance each other across the backbone. However, cloud gamers tend to be heavy bi-directional users, should they pay more?

The most cost of a connection lies in the last mile to the customer and in the ISP (billing and customer support etc). The bigger the pipe the cheaper the cost per MB. Most large data providers are effectively their own ISP.

As long as all users, consumers and providers pay their own proportion of backbone costs based on the capacity of their connection, there should be no reason for an additional charge, ie. tax.