Telcos push for funds from streaming, social media giants
Australia’s largest telcos are pushing the federal government to replicate the news media bargaining code and force global digital giants such as Amazon and Facebook to compensate network owners for the pressure online streaming places on their infrastructure.
Singtel Optus, the nation’s second-largest telco, has written to the competition regulator asking it to consider a model to ensure popular video gaming, social media and streaming companies are adequately paying telcos for the high amounts of data used by customers who use their services .
Telcos want gaming companies like Activision to subsidize their networks. Credit:AP
“It’s costing Optus and others in the industry hundreds of millions of dollars every year to keep up with capacity demands,” Optus’ vice-president of regulatory affairs Andrew Sheridan said. “Our returns are reducing and revenues flat-lining. Meanwhile, you’ve got some …of the biggest global players building very profitable businesses on the back of our investments.”
Optus says about 80 percent of the traffic on its network is being driven by gaming and streaming services. Sheridan said some services – such as Netflix – use compression technology to reduce their impact on networks which has helped, but others do little to help.
Under the measures suggested, services such as Netflix, Amazon Prime Video and Paramount, as well as social media websites such as YouTube and Facebook would be required to pay local telcos to compensate for data used when customers use their platforms. Gaming providers such as Take-Two Interactive (the owner of NBA 2K League and Grant Theft Auto) and Activision Blizzard (owner of Call of Duty, Crash Bandicoot and World of Warcraft) would also be required to pay a fee.
The request from the telco sector comes years after the media industry began to push the government to regulate global tech giants Google and Meta, so they could be paid for use of their content on the search engine and in the newsfeed. The move resulted in the creation of a news media bargaining code and about $200 million in commercial deals for news publishers, including this masthead.
With traffic surging during the coronavirus pandemic, telecommunications providers argue they that it will not be able to afford to keep investing in technology if the costs of usage are not shared. In 2020, some media platforms compressed their bit rates – the amount of data per second consumed on a digital network – of their streams.
Telstra said at the time managing traffic on its networks would have been even harder had it not been for the decision of services to reduce streaming quality. Telstra boss Andy Penn recently called out the lack of regulation, warning it would hurt customers in the long term. TPG Telecom boss Inaki Berroeta said earlier this month the streaming, gaming and entertainment market had “relied, thrived and enjoyed a free ride”.
“Data-thirsty streaming companies are reaping huge profits and getting a free ride on the digital highway our industry is spending billions to maintain and upgrade,” a TPG Telecom spokesperson. “Government and regulators need to work with the telco industry to help address the investment imbalance.”