The arrival in a big way of ‘over the top’ video services such as Netflix in Australia is likely to spark a serious discussion on the question of net neutrality, according to Ziggy Switkowski, the chair of NBN’s board and a former Telstra CEO.
Net neutrality is the issue of whether a network operator should be agnostic about the traffic that travels over its infrastructure.
The NBN chairman made the comments during an address to the Ovum Australian OTT Summit in Sydney.
Switkowski said that rather than provide definitive commentary on the issues he wanted merely to acknowledge the emergence of net neutrality and the question of network investment as discussions brought about by the rise of OTT video and the significant cost of rolling out the National Broadband Network.
“Australia has never had the kind of advanced net neutrality debate that has taken place in the US and in the European Union but the arrival of OTT video and the $50 billion cost of the NBN will push us to have such a conversation,” Switkowski said.
Growing availability of high-bandwidth video formats such as 4K through on-demand services will “possibly lead to contention” between the needs of businesses and household entertainment, the NBN chairman said.
“This will raise the question of whether all packets are equal – a matter on which there are strong feelings,” he said.
“We may have to start thinking very differently about the concept of treating all data equally because to provision sufficient capacity in the network to fully enable net neutrality you need to build in massive amounts of overcapacity to accommodate usage peaks,” Switkowski said.
“This creates big problems in the delivery chain because providing that kind of capacity requires a substantial investment.”
NBN recently revealed that the average NBN end user downloaded 110GB in September, representing year-on-year growth of around 70 per cent.
A report released today by Ovum forecasts that Australian customers of subscription video on demand services will hit 4.7 million by 2019, a 300 per cent increase.
Capacity issues related to SVOD “will only become more pressing as more OTT service providers and new video business models emerge over the coming years,” states the report, Australian OTT Video – Creating a New TV Market.
The other issue raised by the growth of video is investment in the “digital ecosystem” to deliver content, Switkowski said today.
Although NBN is progressively providing an access platform across Australia more investment will be needed in distributed servers and upgraded backhaul and transit networks, he said.
“Also, from an NBN perspective, we need to think about what is the best industry response, if any, is needed to the 121 POIs [points of interconnect] and the wholesale backhaul market which appears to have produced a more concentrated RSP landscape in presenting a somewhat steep barrier to smaller players,” he said.
Earlier this year NBN’s CEO, Bill Morrow, said he wanted to look at ways of making it easier for retail service providers to sell services on the network, including providing lower-cost ways for RSPs to connect to the 121 POIs.
A number of POIs were particularly expensive to service due to the cost of backhaul, Morrow said in a speech at the National Press Club.
"We are working with others who see a market opportunity by solving for this remote regional point of entry. At the end of the day, it’s about levelling the playing field and ensuring there is a low barrier to entry and we would hope the markets will do just this," the NBN CEO said during his speech.