No 'fast lane' fees to Singapore telcos: Netflix

Netflix is a big believer in Net neutrality and the open Internet, says Mr Hastings.
Netflix is a big believer in Net neutrality and the open Internet, says Mr Hastings.ST PHOTO: KUA CHEE SIONG

Netflix did not pay fees to Singtel or StarHub for faster access to their broadband customers despite paying ISPs in the United States

Netflix has said that it did not pay any fees to local telcos for smoother streaming to Internet users here, marking a prominent victory for proponents of a democratic Internet in Singapore and globally.

In an interview with The Straits Times last week, Netflix chief Reed Hastings was asked if the United States video-streaming giant had paid fees to Singtel or StarHub. His reply: "No."

This is despite two calls made by Singtel chief executive officer Chua Sock Koong over the past two years that telcos should be allowed to charge major Internet content providers - like WhatsApp, Facebook and YouTube - for consumers to have faster access to their content.

"We are big believers in Net neutrality and the open Internet," said Mr Hastings, who was here to meet local employees.

In the United States, however, Netflix signed a multi-year deal paying Internet service providers (ISPs) such as Comcast and AT&T for faster access to their broadband customers.

The deals were cited by Ms Chua to justify her argument. Ms Chua's call stemmed from telcos losing voice and messaging business to Internet services like WhatsApp, which get away with not paying for using telcos' infrastructure.

These deals go against the idea of a democratic or neutral Internet where every online content provider is treated equally by ISPs. This means no "fast lanes" for content providers that pay extra for prioritisation, or the blocking and "throttling" - or slowing down - of lawful content and services.

Without neutrality, it is feared that consumers could end up having to pay more to access the Internet. ISPs could, say, package services sold to consumers and charge different fees.

A basic service would give access to just e-mail and social networks. "Premium" might let consumers stream videos and music, while "Super Premium" would allow downloads.

While the Federal Communications Commission in the US last year approved rules in favour of protecting Net neutrality, carriers in Singapore are allowed to sell fast lanes to content providers.

The Infocomm Development Authority (IDA) also does not ban throttling outright, but requires ISPs to ensure that user access to legitimate websites does not slow down to the point where online services become "unusable".

Proponents of a neutral Internet are urging the local authorities to regulate the space to prevent small companies from being penalised when ISPs sell fast lanes.

"When telcos are allowed to create fast lanes, it creates an unlevel playing field. Smaller players will not be able to negotiate and will end up paying," said Mr Benjamin Tan, managing director of SuperInternet.

If the local authorities don't step in, "gangsters will rule", he said.

Technology lawyer Jonathan Kok, partner at RHTLaw Taylor Wessing, said that even if various charging schemes are allowed, there must be regulatory oversight to prevent discrimination. "Telcos should not be allowed to charge WhatsApp a high fee as it is deemed to be a competitor," he said.

Separately, Netflix also said it has struck "peering" agreements with both Singtel and StarHub for the free exchange of Internet traffic between their servers.

But peering is not the norm here, with local toll charges costing two to three times more than international ones.

Industry regulator IDA had proposed in a consultation paper - released in February last year (2015) but now closed - that regulation was not necessary as there had been "no evidence" of market failure, such as the abuse of dominance by Singtel or StarHub. Consumers also do not suffer due to these payment arrangements. IDA has yet to issue its decision.

A version of this article appeared in the print edition of The Straits Times on May 04, 2016, with the headline 'No 'fast lane' fees to S'pore telcos: Netflix'. Print Edition | Subscribe