By Melissa Kasule

Taxing entertainment companies will “reduce investment in content” and make higher-priced broadband packages less appealing, urged the Netflix boss, Greg Peters.

Speaking at the Mobile World Congress (MWC) in Barcelona, Netflix Co-CEO said its ISP partners had suggested taxing entertainment companies to “subsidise their network infrastructure” in response to concerns of rising traffic costs.

Peters explained proposing an entertainment tax “would have an adverse effect, reducing investment in content — hurting the creative community, hurting the attractiveness of higher-priced broadband packages, and ultimately hurting consumers.”

Netflix’s ISPs partners claimed the entertainment tax will only be applied to the streamer, but with an increasing number of broadcasters moving from linear to streaming “this will inevitably change over time”.

Peters added, “broadband customers, who drive this increased usage, already pay for the development of the network through their subscription fees. Requiring entertainment companies — both streamers and broadcasters — to pay more on top would mean ISPs effectively charging twice for the same infrastructure.”

The Netflix chief pointed to more investment as the answer when dealing with increasing internet usage. “As more broadcasters shift from linear to streaming, we want a system that encourages more investment” he said. “I believe the better approach is for entertainment companies and operators to focus on what we each do best.”

The company has since launched its US$1 billion content delivery network, Open Connect, which is for free to ISPs. This includes 18,000 servers with Netflix content distributed across 6,000 locations and 175 countries. In addition, Netflix has invested over US$60 billion in content over the last five years, equivalent to roughly 50 per cent of the company’s total revenue.