Telstra's Catch-22 on Netflix

James McGrath
By James McGrath | 11 March 2015

Telstra has not yet ruled out unmetering Netflix access for its customers, despite a formal tie-up with rival subscription video on demand (SVOD) platform Presto.

In the wake of the announcement US SVOD giant Netflix would arrive on Australian shores on 24 March, internet service providers iiNet and Optus were quick to state they would offer users of their fixed-line broadband services access to Netflix streaming without affecting their data caps.

Netflix is not expected to have the same level of impact in Australia as it does in the US, where Sandvine estimated Netflix accounts for about 35% of traffic in the US.

Having Netflix and a raft of other SVOD services hit the marketplace may have seen Australian consumers suffer bill shock, however Internet Service Providers in Australia are making a play to shift capped customers onto all-you-can-eat service.

With major rival ISPs committing to unmeter Netflix traffic Telstra may stick out like a sore thumb in the consumer marketplace if it does not follow suit.

However, complicating matters for Telstra is its tie-up with Presto, which it has an indirect financial interest in.

A spokesperson confirmed to AdNews that it was keeping its options open.

“Telstra is considering data usage and unmetering of SVOD services generally, but cannot comment at this time,” they said.

“We are focused on providing our customers with the best possible experience from subscription video on demand services. Our intention is to work with a number of providers to ensure our customers have the best range of content and great choices available in their home and on the go.”

Telstra has already committed to acting as a re-selling agent for Presto, whereby customers will be able to grab subscriptions with Telstra products as part of a wider play to lure new and existing customers to the telecommunications giant.

It has spoken publicly about the role periphery offerings have to play, and credits its access to exclusive AFL and NRL digital content as reducing customer churn, meaning existing customers are more likely to recontract with Telstra.

Telstra, however, finds itself between a rock and a hard place with Netflix.

Having signed up to re-sell Presto, and having an indirect stake in Presto through Foxtel, offering customers unmetered access to Netflix could be read as giving the US giant a leg up in the Australian market.

However, given both iiNet and Optus have agreed to unmeter Netflix content, customers choosing where to bring their business may find Netflix more appealing than Presto, thereby hampering the fortunes of Telstra.

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