Australian telcos jump on traffic fee bandwagon

The campaign to tax internet traffic has spread to Australia, with Optus being the latest to call on OTTs to contribute to network costs. In a submission to a parliamentary inquiry, Optus said traffic had increased five-fold in the past five years and that big content providers accounted for up to 80% of the peak time volume.

"The challenge for the telecommunications sector is that these streamers do not pay for their traffic to be carried over the telecommunications access infrastructure," Optus said in the submission.

"The current situation is akin to car owners paying for all the costs of heavy goods vehicles on the roads. This creates an unfunded investment burden that potentially puts the sustainability of telecommunications investment at risk," it states in the document. It went on to warn of "far-reaching" consequences that might endanger Australia’s national digital objectives. 

The submission also called for the government to require big content providers "to make a fair contribution to the investment costs they create and from which they profit" – either through regulated commercial arrangements or the imposition of a digital levy. Quoting a report by digital economy consultancy Venture Insights, Optus said the industry had been subject to price deflation, with prices falling 25% since 2012 while consumer prices had grown 33%. At the same time, ROIC had "collapsed" and was now slightly below the cost of capital.

Related:SK Broadband improves its cash position through Netflix agreement

Telstra seeks commercial arrangements

Optus made its appeal in a paper to a senate inquiry into the "Influence of international digital platforms."

In a sign of how quickly this issue has taken hold, OTT firms including Google, Meta, AWS and Microsoft made submissions to the inquiry earlier this year, but none discussed the telco concern of rising traffic volumes.

Executives from the other big Australian operators, Telstra and TPG, expressed similar views to Optus in interviews with the Australian Financial Review last month. Telstra CEO Vicki Brady said the company was not seeking a mandatory usage fee, but was hoping for more commercially negotiated arrangements with the platform players.

TPG's head of external affairs, James Rickards, complained tech giants were getting "a free ride" and pointed to the expanding number of markets abroad where usage fees were now on the agenda. This includes Europe, the UK and, more recently, India.

Last week South Korean ISP SK Broadband and Netflix settled a long-running legal dispute over network traffic charges by agreeing to collaborate on content, with Netflix also committing to pay millions in annual fees.

Related:Indian telcos want OTTs to contribute to network costs