Greg Peters, Netflix co-CEO, at the Mobile World Congress Keyone delivered a strong reply to the telecommunication companies' demands that streaming providers contribute to the financing of broadband networks in the future. Peters pointed out that the expanding usage of the internet presents a significant opportunity for all parties involved.
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Netflix has Invested its Share in the Content Ecosystem
Greg Peters has pushed back on calls for an "Entertainment Tax" on streaming companies proposed by internet service provider (ISP) partners. In his unique way, the Netflix co-CEO has presented the company' stand over investing in technology, content, the creative industry for the state-of-the-art - studios, sound stages, creative communities, Content Delivery Networks (CDN) - Open Connect, encoding Technology, cultural levies and investment obligations and so on.
At the MWC23, in a keynote address, Peters said a tax on the content plarforms or creative content would reduce investment in content and its relative ecosystem, hurting the creative community.
European Commission Call for Regulation
"ISPs claim that these taxes would only apply to Netflix. But this will inevitably change over time as broadcasters shift from linear to streaming." His speech comes days after the European Commission (EU) called for regulation designed to create a cheaper and more effective roll-out of gigabit networks across the EU, terming it Fair Share on Big Tech. Telecom companies are pushing European regulators to consider charging tech giants to help fund massive upgrades to their infrastructure, with the 5G roll-out ongoing.
"Some of our ISP partners have proposed taxing entertainment companies to subsidise their network infrastructure. But as Commissioner Breton said, it shouldn't be a binary choice between Big Telco or entertainment companies," Peters said during his keynote on Tuesday.
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Netflix is Investing and creating the EcoSystem
Netflix said it has spent over $1 billion on Open Connect, its own content delivery network, offered for free to ISPs. This includes 18,000 servers with Netflix content distributed across 6,000 locations and 175 countries. With this CDN, when Netflix users press play, the content be streamed from around the corner, increasing efficiency for operators while ensuring a quality experience for consumers. Netflix has also developed encoding technology to reduce file sizes and optimise bandwidth use. This helps the telecom Industry to achieve efficiency within telco's networks.
"Of course, increasing usage requires investment. For our part, Netflix has invested over $ 60 billion in content alone over the last five years. That's equivalent to roughly 50 per cent of our total revenue," said Peters.
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Operating Margins lower than British Telecom or Deutsche Telekom
"As the consumer group BEUC has pointed out there is "no suggestion these levies would be passed onto consumers in the form of lower prices or better infrastructure". And it's worth noting that our operating margins are significantly lower than either British Telecom or Deutsche Telekom.
So we could just as easily argue that network operators should compensate entertainment companies for the cost of our content - exactly as happened under the old pay-TV model," added Peters.
Focus on What We Each Do Best
Peters believes that the better approach is for entertainment companies and operators to focus on what we each do best, "creating a rising tide that will lift all boats."
For Netflix, that means continuing to invest in and improve the quality and variety of its content. Netflix started its original programming strategy about a decade ago, and building a lifetime of entertainment in just ten years has been a huge challenge.
Peters ended the keynote by saying, "And with that in mind, I will leave you with a never before seen clip of our upcoming documentary series about the Tour de France."