Netflix’s whirlwind success in Australia is causing headaches for retail ISPs and putting pressure on NBN to change its pricing structure.
The video-streaming service launched there in late March and its popularity has led to a dramatic increase in data traffic.
This poses a challenge to retail broadband providers, which currently pay state-owned wholesaler NBN A$17.50 per Mbps per month for its Connectivity Virtual Circuit (CVC) service, which provides backhaul capacity between broadband access networks and NBN’s points of interconnect (PoI).
More traffic directly translates to a higher CVC cost, squeezing the margins of ISPs that charge a flat rate for data.
Following Netflix’s arrival in Australia, "we got six-to-12 months’ worth of [data] growth in six weeks," noted David Buckingham, CEO of iiNet, in a report by the Australian Financial Review on Monday.
He said it marks "an unprecedented shift" in the market that could land customers with higher prices.
NBN has already reduced its CVC price from A$20 to A$17.50, but now it faces calls to reduce it further.
"We are committed to both upgrading Australia’s broadband network and building a sustainable wholesale company," said NBN, in the AFR report. "We will continue to engage with retail service providers on our commercial model as more and more premises connect."
