What Is The Netflix Tax? Here Is The Full Explanation

Women Love Tech
on 6 August 2019

NBN Co has copped a lot of flak recently for floating the idea of a “Netflix tax” to Australian Internet providers. Before grabbing your torch and pitchfork, though, it’s important to understand exactly what this Netflix tax could be and what it might mean for the average Aussie.


What is the Netflix tax?

While NBN Co didn’t go into too much detail about the idea, the gist is that the network operator is looking to separate streaming Internet traffic from regular Internet traffic (such as people browsing Facebook or checking their emails). In doing so, it would allow Internet providers to change how their customers stream videos from services like Netflix, Stan and Foxtel.

Such a move could lead to a great many outcomes, but one of the more controversial is the introduction of a surcharge for the ability to stream videos. Common concerns frame this “Netflix tax” as an additional monthly fee on top of the standard price of a broadband plan, similar to the international call packs offered by many mobile phone providers.

It’s worth noting, however, that NBN Co claims that it is simply exploring ideas with this proposal. In a statement to media outlet iTnews, an NBN Co spokesperson said, “We are not working towards any predefined outcomes, and the process is not about levying additional charges on customers.”

Netflix Tax

What does this mean for Aussies?

Paying more just to watch your favourite Netflix shows sounds pretty unappealing, but it’s important to remember that we’re talking in hypotheticals here. NBN Co raised the idea with Australian Internet providers in its June 2019 wholesale pricing review, and it’s currently unclear whether any Internet providers would be willing to follow through with it, especially given the public outcry that it has sparked.

To further allay concerns, the Australian Competition and Consumer Commission (ACCC) has confirmed that it’s aware of NBN Co’s proposal. Without any concrete details, though, the ACCC feels it’s too early to determine whether it would jeopardise consumer rights or, most troublingly, breach net neutrality.

What is net neutrality and why does it matter?

In essence, net neutrality is the notion that Internet providers must treat all traffic on the Internet equally, regardless of what it is, where it’s going or where it’s coming from. This idea stems from one of the founding principles of the Internet: that people should be able to share information freely and without restriction.

Without net neutrality, an Internet provider could, say, intentionally limit your Internet speed when streaming from Netflix to coax you into subscribing to a different streaming service – one that the Internet provider might have a financial stake in, perhaps.

Netflix Tax

It could take that same approach to activities beyond streaming, too. It might decide to hamstring performance when shopping at certain online retailers, or prevent you from reading news stories on specific websites. In doing this, an Internet provider could shape the online behaviour of its customers and significantly impact the success of any business operating online.

If that isn’t harrowing enough, the loss of net neutrality would open up a whole new avenue for discrimination. An Internet provider founded by proponents of one political party could potentially block access to the websites of an opposing political party. Worse, an Internet provider peopled by bigots could prevent access to social media, news stories and other information that clashes with their ideals.

What happens next?

At the moment, there’s not a whole lot that Aussies can do about this potential “Netflix tax”. Until more details surface, we can’t really know what impact it might have – assuming it doesn’t simply fizzle out in the wake of the negative public response.

Women Love Tech would like to thank Matt Sayer for his contribution. He is a writer for Finder, covering all things technology and telecommunications

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