Netflix refuses to pay extra tax demanded by European internet service providers(english.elpais.com)
english.elpais.com
Netflix refuses to pay extra tax demanded by European internet service providers
https://english.elpais.com/economy-and-business/2023-03-01/netflix-refuses-to-pay-extra-tax-demanded-by-european-internet-service-providers.html
52 comments
> Telcos are lobbying for some of this money to go to them because it's "unfair"
This always makes me giggle. A company who is already getting paid for transmitting data wants to get paid twice for transmitting some data, essentially charging their customers twice for some of those bits.
Greedy toads.
This always makes me giggle. A company who is already getting paid for transmitting data wants to get paid twice for transmitting some data, essentially charging their customers twice for some of those bits.
Greedy toads.
Yeah but telcos have big political influence in some EU countries, especially given that some of them were former national companies sold off to investors with ties to politicians. So they can just lobby for whatever laws they want.
This demand form telcos is basically a mob shakedown.
"Say Netflix, we heard you're making big money selling your stuff to customers ON OUR TURF. Here's the deal, you give us a cut of your sales, or else, who knows, bad things can happen in this neighborhood, and we can protect you."
This demand form telcos is basically a mob shakedown.
"Say Netflix, we heard you're making big money selling your stuff to customers ON OUR TURF. Here's the deal, you give us a cut of your sales, or else, who knows, bad things can happen in this neighborhood, and we can protect you."
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The lead sentence of the story sounds quite different from that:
> Netflix does not want to pay European internet service providers (ISP) for rising traffic costs due to the popularity of streaming video content.
Edit: Yes, your "somewhat related to" is a pretty reasonable disclaimer. When I'm not trying to read too fast.
> Netflix does not want to pay European internet service providers (ISP) for rising traffic costs due to the popularity of streaming video content.
Edit: Yes, your "somewhat related to" is a pretty reasonable disclaimer. When I'm not trying to read too fast.
> for rising traffic costs due to the popularity of streaming video content.
I haven't seen an increase in quality /s
I haven't seen an increase in quality /s
These ISP's are suffering under the delusion that they are in business with Netflix. No solvent business would agree to what they are asking. Its a devil's pact.
Though, I don't blame them for asking. It never hurts. Except perhaps on the PR front when they are turned down. Now they are facing customers that want Netflix and who know that their ISP's desire (or need) for a cut of the action is why they can't get it. Which is a business opportunity for an ISP that can better structure their offerings.
Though, I don't blame them for asking. It never hurts. Except perhaps on the PR front when they are turned down. Now they are facing customers that want Netflix and who know that their ISP's desire (or need) for a cut of the action is why they can't get it. Which is a business opportunity for an ISP that can better structure their offerings.
Every big company that has some leverage will use it to the max extent, there are not really separate roles in the business, it's all about wrestling for power. Look at apple for an example of rent-seeking pretty much everywhere they can
's/tax/extortion payments/'
If I drive a rental car to a restaurant, the rental car firm shouldn't demand a cut of my dinner tab, either.
If I drive a rental car to a restaurant, the rental car firm shouldn't demand a cut of my dinner tab, either.
but the city can ask you to pay a tax to support its infrastructure
the people who own the infrastructure can ask what ever they want
including to pay to help support the infrastructure your business is using for free
the people who own the infrastructure can ask what ever they want
including to pay to help support the infrastructure your business is using for free
This is the wrong analogy. If I rent a car, and drive it to a restaurant, I might pay road tax...which is fine because I want to use the road.
This is more akin to taxing the restaurant. The customer already paid, and the only reason they paid is because they wanted to go to the restaurant. Without the restaurant (or more broadly, places to go), people would have no use for the roads.
This is more akin to taxing the restaurant. The customer already paid, and the only reason they paid is because they wanted to go to the restaurant. Without the restaurant (or more broadly, places to go), people would have no use for the roads.
you don't go to netflix to watch a movie at their place
netflix delivers data to you
are you saying the delivery man should only buy his car (AWS) and never help maintain the road (infrastructure)?
why should the customer who order food has to pay for the road the delivery person will use? the customer already paid for the service!
why, to you, this analogy only works when it doesn't benefit the customer?
billions $ are circulating in the market, and our core infrastructures always has to suffer
look at what happened in Ohio
netflix delivers data to you
are you saying the delivery man should only buy his car (AWS) and never help maintain the road (infrastructure)?
why should the customer who order food has to pay for the road the delivery person will use? the customer already paid for the service!
why, to you, this analogy only works when it doesn't benefit the customer?
billions $ are circulating in the market, and our core infrastructures always has to suffer
look at what happened in Ohio
He's saying the infrastructure costs should be priced in already. Netflix pays their portion of costs to send data. I pay my portion of costs to my ISP to receive data. If ISPs are unable to maintain the infrastructure I'm paying for, then they're not pricing their services appropriately.
we'll keep arguing until Asia gets better infrastructure than us
oh wait...
we'll keep arguing until Asia gets their interplanetary infrastructure before us
oh wait..
the goal is not to make internet a burden to the people
the goal is to make sure we are moving forward
but this is something obscure to certain people over here, hence our situation
oh wait...
we'll keep arguing until Asia gets their interplanetary infrastructure before us
oh wait..
the goal is not to make internet a burden to the people
the goal is to make sure we are moving forward
but this is something obscure to certain people over here, hence our situation
Netflix already invests a huge amount into backbone infrastructure. Asking them to pay for the infrastructure which users are purportedly already paying for is plain old double-dipping.
Consider a gravel road that connects your cabin to the main city road. The HOA might charge periodic maintenance fees to keep that road operable, depending on how many miles get driven on it, essentially charging you for usage.
If you then order delivery from a restaurant, then yes, it's very unreasonable for the restaurant to pay for that road's upkeep: they only need to travel that road because you ordered the food.
The restaurant should still pay taxes which go towards maintaining the city roads, but your privately operated HOA doesn't get to toll them to get to your house.
Consider a gravel road that connects your cabin to the main city road. The HOA might charge periodic maintenance fees to keep that road operable, depending on how many miles get driven on it, essentially charging you for usage.
If you then order delivery from a restaurant, then yes, it's very unreasonable for the restaurant to pay for that road's upkeep: they only need to travel that road because you ordered the food.
The restaurant should still pay taxes which go towards maintaining the city roads, but your privately operated HOA doesn't get to toll them to get to your house.
Your entire comment is incoherent.
>netflix delivers data to you
You have to stick with one story, you can't change your mind and expect people to not call you out.
>are you saying the delivery man should only buy his car (AWS) and never help maintain the road (infrastructure)?
If netflix runs their own delivery then they already pay for most of the costs including public infrastructure. There is no problem and no reason to pay extra for no additional service being rendered.
>why should the customer who order food has to pay for the road the delivery person will use? the customer already paid for the service!
I don't know in what universe you live but most companies that deliver products charge an extra delivery fee. In the case of the internet, the fee structure is split up so that data centers pay for delivery to a hub node and ISP customers pay for delivery from that hub node to their home. The delivery fee is merely split into two parts, absolutely nothing complicated. The delivery fee of the company is transparently included in their pricing and this means the entire delivery including infrastructure costs is already paid for. Your analogy regarding ISPs being the road makes no sense. ISPs are another delivery company, not a road company as most countries do not legislate that the infrastructure and service have to be separated into multiple companies.
>billions $ are circulating in the market, and our core infrastructures always has to suffer
What does that have to do with anything? High speed internet infrastructure is very cheap, you just need to build it but there is zero incentive to build out infrastructure if you can just charge more money without delivering a faster and higher quality service.
We could have had high speed internet in every country if ISPs weren't incentivized to get subsidies for their copper networks and milk those cash cows dry until they get even more subsidies for the fiber roll out even though they have plenty of money.
>netflix delivers data to you
You have to stick with one story, you can't change your mind and expect people to not call you out.
>are you saying the delivery man should only buy his car (AWS) and never help maintain the road (infrastructure)?
If netflix runs their own delivery then they already pay for most of the costs including public infrastructure. There is no problem and no reason to pay extra for no additional service being rendered.
>why should the customer who order food has to pay for the road the delivery person will use? the customer already paid for the service!
I don't know in what universe you live but most companies that deliver products charge an extra delivery fee. In the case of the internet, the fee structure is split up so that data centers pay for delivery to a hub node and ISP customers pay for delivery from that hub node to their home. The delivery fee is merely split into two parts, absolutely nothing complicated. The delivery fee of the company is transparently included in their pricing and this means the entire delivery including infrastructure costs is already paid for. Your analogy regarding ISPs being the road makes no sense. ISPs are another delivery company, not a road company as most countries do not legislate that the infrastructure and service have to be separated into multiple companies.
>billions $ are circulating in the market, and our core infrastructures always has to suffer
What does that have to do with anything? High speed internet infrastructure is very cheap, you just need to build it but there is zero incentive to build out infrastructure if you can just charge more money without delivering a faster and higher quality service.
We could have had high speed internet in every country if ISPs weren't incentivized to get subsidies for their copper networks and milk those cash cows dry until they get even more subsidies for the fiber roll out even though they have plenty of money.
> netflix delivers data to you
But Netflix, like everyone else, already pays for their use of the networks. This looks like double-dipping.
But Netflix, like everyone else, already pays for their use of the networks. This looks like double-dipping.
> netflix delivers data to you
No, it doesn't. You pay your ISP to deliver Netflix data to you.
No, it doesn't. You pay your ISP to deliver Netflix data to you.
I don’t think the analogy works.
I am paying my ISP for internet access.
Netflix is paying AWS(?) for internet access.
Why should Netflix have to pay my ISP? I already paid them!
I am paying my ISP for internet access.
Netflix is paying AWS(?) for internet access.
Why should Netflix have to pay my ISP? I already paid them!
"the city" means "a legal goverment". An ISP is not a government, however much they might wish to get away with pretending to be...if and only if & when that bit of pretend happens to be convenient to them.
If the ISP's customer has paid for "Down_Mbps/Up_Mbps internet service", then either the ISP needs to deliver the bits, or deliver a refund. If the ISP's management can't figure out how to calculate their costs, and charge enough to turn a profit, then either the shareholders or the government need to replace them with management who can.
If the ISP's customer has paid for "Down_Mbps/Up_Mbps internet service", then either the ISP needs to deliver the bits, or deliver a refund. If the ISP's management can't figure out how to calculate their costs, and charge enough to turn a profit, then either the shareholders or the government need to replace them with management who can.
But all the customers of Netflix are already paying for this traffic? The reason consumers are even willing to pay what they do for Internet is because of services like Netflix. Being an ISP is already a high margin business, there is no shortage of funds for investment. EU countries have had the fastest connections in the world for a while now. If you want wealth transfer from American companies that innovate to stagnating European companies you can just say so, no need to rationalize.
So ISPs should be nationalized?
Sounds reasonable, since they don't seem to be viable as businesses.
And compensation to the current shareholders, for their evidently worthless companies, should be token at most.
And compensation to the current shareholders, for their evidently worthless companies, should be token at most.
Shouldn't a business have the right to fail? It seems like a reasonable technical requirement. I should be allowed to screw up, go bankrupt and close shop? Or should it be that I get to keep the profits but when I make a mess tax payers should help me?
It seems sensible to nationalize all critical infrastructure?
It seems sensible to nationalize all critical infrastructure?
The correct solution for this is to ask ISP customers to pay for resource usage if, in fact, their usage is so onerous.
This is transparently an effort to keep prices apparently low for the end consumer to make the internet service more attractive to consumers and try to reach into the deep pockets of netflix and other content providers to subsidize that cost. Ultimately that looks to consumers like expensive netflix and cheap ISP, which benefits the ISPs but doesn't really help anyone else.
This is transparently an effort to keep prices apparently low for the end consumer to make the internet service more attractive to consumers and try to reach into the deep pockets of netflix and other content providers to subsidize that cost. Ultimately that looks to consumers like expensive netflix and cheap ISP, which benefits the ISPs but doesn't really help anyone else.
This is one of those situations where I completely agree with Netflix. Why should they have to pay a tax just because their website is popular and serves a lot of traffic.
This seems like extortion more than a tax.
This seems like extortion more than a tax.
Actually, it's not only that Netflix is popular, but also that Netflix content is heavy... so fewer user are generating more IP traffic comparing to another website as popular as Netflix
Anyway, in the end, the ISP may just "limit Netflix bandwidth". Then he will lose some customers (changing ISP)... but Netflix will lose some customers too (leaving Netflix because of bad quality compared to another content provider). This would be a lose/lose game
Or both may agree to share a part of the burden of "heavy contents", most for ISP et a bit for Netflix
Anyway, in the end, the ISP may just "limit Netflix bandwidth". Then he will lose some customers (changing ISP)... but Netflix will lose some customers too (leaving Netflix because of bad quality compared to another content provider). This would be a lose/lose game
Or both may agree to share a part of the burden of "heavy contents", most for ISP et a bit for Netflix
I bet a lot of ISPs are also selling TV services and cord cutting is hurting their business.
So they got creative and figured out they can ask for a Netflix tax to make it seems like it's fair compensation for the "huge" bandwidth the service is consuming.
So they got creative and figured out they can ask for a Netflix tax to make it seems like it's fair compensation for the "huge" bandwidth the service is consuming.
> user are generating more IP traffic
The users are already paying their ISP for the traffic they're generating. Whether they're using it to access Netflix or any other website.
The users are already paying their ISP for the traffic they're generating. Whether they're using it to access Netflix or any other website.
>Actually, it's not only that Netflix is popular, but also that Netflix content is heavy... so fewer user are generating more IP traffic comparing to another website as popular as Netflix
If that is your argument, then the entire subscription contract with the ISP is inherently fraudulent as they are advertising a service that they are incapable of providing. Instead of throttling netflix, customers should be suing their ISP for defrauding them.
If that is your argument, then the entire subscription contract with the ISP is inherently fraudulent as they are advertising a service that they are incapable of providing. Instead of throttling netflix, customers should be suing their ISP for defrauding them.
European here. I am opposed to such an additional fee because ISP's don't have a contract with Netflix, but with their customers.
I think it's quite simple. If their customers don't get what they are paying for, they will switch to another ISP. In case all ISP's choose to demand such a fee, Netflix needs to complain about anti-competitive collusion.
I think it's quite simple. If their customers don't get what they are paying for, they will switch to another ISP. In case all ISP's choose to demand such a fee, Netflix needs to complain about anti-competitive collusion.
This sounds similar to the Netflix and Comcast/Verizon spat from 2014 in the US where Comcast wanted paid peering from Netflix.[1] The customers already pay their ISP for this content to be delivered and Netflix already pays for transit to deliver these bits.
It's interesting Netflix is framing this this as hurting content creators. I suppose this is probably more true today than it was in 2014 given that original content is now the key drivers for streaming services.
[1] https://www.theverge.com/2014/3/20/5530898/netflix-blasts-co...
It's interesting Netflix is framing this this as hurting content creators. I suppose this is probably more true today than it was in 2014 given that original content is now the key drivers for streaming services.
[1] https://www.theverge.com/2014/3/20/5530898/netflix-blasts-co...
But Netflix was NOT paying transit. They were paying for peering. Transit costs more. To reduce costs, they peered with large networks. The problem is that the company they paid to setup peering (Cogent) didn't want to risk their settlement-free peering agreements. Cogent would have had to start paying for peering. It turned out it was much better for Netflix to setup their own peering agreements.
Incorrect. Netflix purchased transit from Level 3 beginning in 2010 and subsequently with Cogent.[1][2]. They then went on to purchase additional transit from Telia, NTT and Tata in order to get routes into the eyeball networks that began making a stink. They eventually agreed to do paid peering with the last mile eyeball networks - AT&T Verizon, Time Warner Cable and Comcast. It seem as though you not understanding peering and transit. Had they been paying for peering there wouldn't have been an issue in the first place. Paid peering was the very thing the last mile networks wanted.[3].
Netflix prior to the roll out of their Open Connect CDN offering used Akamai, Limelight, and Level 3 as their CDN providers. When they rolled out Open Connect they offered ISPs the ability to peer directly with them at number of different peering exchanges.[4] This was a few years after the Level 3 Comcast spat. You seem to be confusing events.
[1] https://qz.com/256586/the-inside-story-of-how-netflix-came-t...
[2] https://archive.is/2AC6C#selection-735.154-735.169
[3] https://arstechnica.com/tech-policy/2014/06/fcc-gets-comcast...
[4] https://techcrunch.com/2012/06/04/netflix-open-connect/
Netflix prior to the roll out of their Open Connect CDN offering used Akamai, Limelight, and Level 3 as their CDN providers. When they rolled out Open Connect they offered ISPs the ability to peer directly with them at number of different peering exchanges.[4] This was a few years after the Level 3 Comcast spat. You seem to be confusing events.
[1] https://qz.com/256586/the-inside-story-of-how-netflix-came-t...
[2] https://archive.is/2AC6C#selection-735.154-735.169
[3] https://arstechnica.com/tech-policy/2014/06/fcc-gets-comcast...
[4] https://techcrunch.com/2012/06/04/netflix-open-connect/
You are correctly. I was imprecise. They were trusting another company to peer for them. They thought they were purchasing "CDN services". The problem is that one of those companies was Cogent. Cogent prides itself with settlement-free peering. But since Netflix put so much traffic onto Cogent's network, it caused traffic to push beyond the peering agreements. Cogent didn't want to pay for peering. Once Netflix took on peering themselves, things went much, much better and the customers have been pretty happy ever since.
If Netflix understood peering from the beginning, they wouldn't have ran into these issues and might have saved themselves some money.
Peering is what saved the Internet back in the late 90's through early 2000's and proved Metcalfe wrong. People using the Netflix problem to push for NN were wrong.
If Netflix understood peering from the beginning, they wouldn't have ran into these issues and might have saved themselves some money.
Peering is what saved the Internet back in the late 90's through early 2000's and proved Metcalfe wrong. People using the Netflix problem to push for NN were wrong.
Same old song… We aren’t dumb pipe, we want a share of added value.
How this is not racket? Your customers are paying you for the service, that they are using whatever they like. If you cannot provide it, someone will.
Requesting content providers to subsidize your business is anticompetitive in some single provider case and cartel in industry wide
How this is not racket? Your customers are paying you for the service, that they are using whatever they like. If you cannot provide it, someone will.
Requesting content providers to subsidize your business is anticompetitive in some single provider case and cartel in industry wide
Let’s say this did happen, and Netflix responded by moving all their EU traffic to 3rd party CDNs. What then? Would ISPs start going after Akamai and such for the same compensation?
If the media URL is totally opaque (Akamai domain, encrypted binary file) I don’t think they would even be able to prove it’s Netflix traffic.
If the media URL is totally opaque (Akamai domain, encrypted binary file) I don’t think they would even be able to prove it’s Netflix traffic.
Wait that's the whole article? What is this proposed "tax"? Are ISPs lobbying the government to levy a new tax? Is this just a colloquial term for a fee between private businesses? What do the ISPs say about this? Did the Netflix CEO make up this story to sound cool in their keynote?
Yes ISPs are lobbying hard for a tax like this in Europe (not for fees between businesses, they want the government to collect it for them): https://www.euractiv.com/section/digital/news/commission-to-...
ISPs already offer limited data packages. You don't have to buy flat rate. You can pay for x GB. So why does anyone need to pay again for the same data transfer the end user already paid for?
How about Germany pays Netflix because German citizens are watching Netflix too much and are using Netflix infrastructure?
Ridiculous.
How about Germany pays Netflix because German citizens are watching Netflix too much and are using Netflix infrastructure?
Ridiculous.
Because most ISPs are also offering TV services and Netflix is eating their lunch, so they figured that asking for a "Cord cutter" tax was bad PR, but asking for a "Bandwidth tax" was somehow fair.
Government are pressuring ISP to install fiber to home, with target for each year as the percentage of covered population. This ain't cheap. Government could tax content provider to subsidized ISP, and in turn, having more population covered by fiber is a good thing for Netflix !
This is like a company has a contract with the government to keep the roads in good order. The company then feels like it should also have the right to check every vehicle to see what they're carrying so the company can levy a value added tax. So it's very clearly double payment. Nice work if you can get it.
Siding with Netflix, though it's somewhat weird that they call this a tax when it is a fee. States tax. Corporations extract fees. Taxes are for public welfare and balancing out the amount of money in the economy. Fees are for generating profits. That's a major difference.
It's not weird. It's PR on Netflix' part. From the US minded POV, fees are costs borne for service provided. Tax is theft. It is weird that he said this in Barcelona, discussing EU, where it wouldn't have landed the same way.
> From the US minded POV [...] tax is theft.
Not really. That sort of thinking applies to a specific subgroup in the US, but isn't representative of majority thought.
Not really. That sort of thinking applies to a specific subgroup in the US, but isn't representative of majority thought.
I wasn't being literal, just making a point. Like Greg Peters of Netflix was.
This should be addressed through the negotiation of peering agreements between Netflix and ISPs.
That is my reaction. Am I missing something here? Are Net Neutrality rules getting in the way?
I know when the NN topic was really hot, many were conflating treating the packets the same with peering agreements. Peering has nothing to do with NN.
Years ago people were complaining about Netflix performance issues and thinking that the ISP was throttling Netflix when it was an issue with peering capacity.
If the rules in the EU mess with peering negotiations, then the rules need to be fixed.
I know when the NN topic was really hot, many were conflating treating the packets the same with peering agreements. Peering has nothing to do with NN.
Years ago people were complaining about Netflix performance issues and thinking that the ISP was throttling Netflix when it was an issue with peering capacity.
If the rules in the EU mess with peering negotiations, then the rules need to be fixed.
Telecos, large and small, have to upgrade equipment on their own dime to accommodate Big Tech traffic and growth. Currently they are free riding off the telcos. If Big Tech is causing the drive to upgrade and doesn't want to pay, their services need to be turned off in unison across the EU.
Both tech companies and their users already pay telcos for the bandwidth they use. Where's the free ride?
I am with netflix on this one.
Telcos are lobbying for some of this money to go to them because it's "unfair" that they have to transit so much traffic from big tech companies on behalf of their customers (???): https://www.reuters.com/technology/eu-consult-big-tech-contr...