British Telecom Wants Netflix To Pay A Tax Simply Because Squid Game Is Popular
from the good-luck-with-that dept
For years telecom executives, jealous of internet services and ad revenue, have demanded that content and services companies pay them an extra toll for no reason. You saw this most pointedly during the net neutrality fracas, when AT&T routinely insisted Google should pay it additional money for no coherent reason. Telecom execs have also repeatedly claimed that Netflix should pay them more money just because. Basically, telecoms have tried to use their gatekeeper and political power to offload network investment costs to somebody else, and have spent literally the last twenty years using a range of incoherent arguments to try and justify it with varying degrees of success.
While these efforts quieted down for a few years, they’ve popped back up recently thanks to, of all things, Netflix’s Squid Game. In South Korea, ISPs have demanded that Netflix pay them more money because of the streaming demand the popular show places on their networks. As we noted then this makes no coherent sense, given ISPs build their networks to handle peak capacity load; what specific type of traffic causes that load doesn’t particularly matter. It’s just not how network engineering or common sense work.
That’s not stopping telecom executives around the world, of course. Across the pond, British Telecom Chief Executive Marc Allera has trotted out the same argument there, claiming that a surge in usage (during a pandemic, imagine that) is somehow Netflix’s problem:
“Every Tbps (terabit-per-second) of data consumed over and above current levels costs about ?50m,? says Marc Allera, the chief executive of BT?s consumer division. ?In the last year alone we?ve seen 4Tbps of extra usage and the cost to keep up with that growth is huge.?
An overwhelming majority of day-to-day usage, up to 80%, is accounted for by only a handful of companies such as YouTube, Facebook, Netflix and the games company Activision Blizzard.”
But again that’s not how any of this works. ISPs build out network infrastructure based on managing peak demand. It doesn’t matter whether that demand originates from Squid Game or video gaming. As an ISP it’s your responsibility to meet consumer and enterprise demand, since that’s what they already pay you an arm and a leg for. Consumers and businesses alike already pay ISPs for bandwidth and transit; often accompanied by a steady array of consistent price hikes. ISPs are effectively asking for yet another additional troll toll, you know, just because.
Whether talking about Netflix or Google, one core component of this telecom executive argument is always that tech companies are “getting a free ride”:
“A lot of the principles of net neutrality are incredibly valuable, we are not trying to stop or marginalise players but there has to be more effective coordination of demand than there is today,? he says. ?When the rules were created 25 years ago I don?t think anyone would have envisioned four or five companies would be driving 80% of the traffic on the world?s internet. They aren?t making a contribution to the services they are being carried on; that doesn?t feel right.”
But nobody gets a “free ride” in telecom. Consumers and companies alike pay increasingly more money for bandwidth. And in the case of companies like Google and Netflix, they pay billions of dollars for expedited transit, undersea cable routes, CDNs (which Netflix provides ISPs for free), and even (in Google’s case) their own residential ISPs. Netflix also has a long history of providing users different tools to limit streaming so it doesn’t run afoul of user broadband caps.
Suggesting they somehow get a free ride and should pay another troll toll just because makes absolutely no sense. It’s a dusty old talking point that originated with AT&T nearly twenty years ago that began the net neutrality debates. Its origins are simply greed. Telecom execs are simply trying to offload the costs of network investment (their job) to somebody else to make investors happy. This somehow gets dressed up into something far more elaborate than it actually is.