Should Streaming Sites Fund Broadband Expansion?

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: nexttv.com)

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: arstechnica.com)

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?