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Will Australians have to fork out for a new 'Netflix tax'?

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Recent proposals that would have potentially seen Australians paying a "Netflix tax" just to make sure their broadband service was fast enough for them to watch their favourite shows had consumers up in arms.

Despite the National Broadband Network (NBN) promising increased speeds, complaints about buffering and delays when streaming video are common.

A discussion paper on pricing from NBN Co earlier this year revealed that the network builder was considering a new pricing model where broadband providers would have to pay more to guarantee a consistent enough service for streaming video.

While that change would have affected any streaming service, it quickly ended up being labelled as a "Netflix tax", reflecting Netflix's dominant position in the streaming market. It has 11 million subscribers in Australia, according to research firm Roy Morgan.

netflix tax

Proposals to charge more for video-grade services have always been controversial.

The internet was built on the principle of "net neutrality", meaning that all data sent around the network is treated with equal priority.

In the US, rules guaranteeing net neutrality were axed in 2018, and there were fears that the NBN proposal would lead Australia in the same direction.

While the proposal would have impacted wholesale costs, those increases would inevitably have been passed onto consumers.

Margins are already thin for most broadband providers, so if their costs go up, yours will too.

nbn national broadband network

Unsurprisingly, the notion provoked a lot of anger online - so much so that NBN Co has now fully and officially dropped the idea.

Instead, it has floated alternative proposals to offer cheaper, basic speed bundles for cost-conscious households, along with higher-speed packages.

Those ideas have been put out to the industry for consultation, but there's no guarantee that they'll actually result in new products, and even if they do they're unlikely to appear before mid-2020 at the earliest.

While you might not have to worry about the "Netflix tax" for now, making sure your broadband plan can cope with a household full of streaming addicts is still a challenge.

The key is to check the peak evening speeds offered by your current provider.

If your provider doesn't quote those speeds, it's definitely time to look around and switch.

If it does, and you're seeing a figure of 30Mbps or less, then it's also worth shopping around to see if you can score higher speeds for less money.

A final tip: think carefully before signing up to a long-term contract for broadband.

While 24-month contracts will offer perks like free installation and modems, you'll be stuck if your provider turns out to offer poor service, and you won't be able to take advantage of any cheaper offers or new plans.

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Angus Kidman is editor-in-chief of finder.com.au.
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