Netflix Warns Content Will Suffer if It’s Forced to Fund Network Upgrades

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Netflix co-CEO Greg Peters used his first public speaking engagement since taking on the role in January to make it clear that the company doesn’t want to be forced to contribute to the costs of building out internet infrastructure in Europe.

Internet service providers in the region are complaining about being forced to bear all the costs of providing the technology required by data-hungry internet companies such as Apple and Netflix. As a result, the European Commission is now mulling rules that would require streaming services to pay a “fair and proportionate contribution” towards infrastructure costs.

But speaking at Mobile World Congress in Barcelona on Tuesday, Peters said that taxing entertainment companies to subsidize ISPs would have a “significant adverse effect” on their ability to invest in content. This, he added, would hurt the local creative communities around Europe.

Peters emphasized in his speech the extent to which Netflix sees these creative communities as important partners, learning on the success of the Oscar-nominated All Quiet on the Western Front, which was made in Germany, and other popular shows and films, such as Elite from Spain and The Crown from the UK.

The ongoing argument between streaming services and ISPs is being referred to in Europe as the battle over fair share between Big Telco and Big Tech. The concern of ISPs is that sustained traffic growth driven by Netflix and its rivals as they continue to make ever-higher numbers of shows and movies will put untold pressure on their networks, which the ISPs will have to pay to upgrade. Entertainment companies such as Netflix are reluctant to pay for what they view as bringing more value and more customers to those operators.

Peters acknowledged that investment was necessary, but he argued that Netflix had invested $60 billion, which amounts to around 50% of its revenue, in content over the past five years. The company has played its part by creating “better, more varied content, leading to more people willing to pay for better broadband services,” he said. He also outlines the other initiatives Netflix invests in to nurture talent and fund content delivery networks in countries around the world.

On Monday at MWC, European Commissioner Thierry Breton made a speech in which he said he felt that the idea of ​​Big Tech versus Big Telcos was too binary, especially as they should all be striving to achieve giant leaps in connectivity together. Peters said he agreed with Breton’s assessment and that he remembered having the same conversations and hearing operators express similar worries in Europe 10 years ago. What ended up happening, he said, was that growing internet usage only served to create more opportunities for everyone.

“A much better approach is for entertainment companies and operators to focus on what we both do best and through that create a rising tide that will lift all boats,” said Peters. “For Netflix, that means continuing to invest in and improve the quality and variety of stories we offer.”

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