Australia might need to start having a conversation about Net neutrality.
That's the assessment of NBN chairman and former Telstra CEO Ziggy Switkowski, who says the entertainment industry is facing a major shift as broadband becomes the main delivery channel for content in the home through 'over-the-top' (OTT) services.
With consumption of subscription video expected to skyrocket in the coming years, the elder statesman of the telco industry says demand will "push us" to question whether all internet traffic is created equal.
"The days of the Australian family crowding round a single TV set in the lounge room are over," he said. "Even if you consider that we now have an average of 2.2 TV sets per household, that statistic is now losing relevance because many homes now have multiple connected viewing devices that range from their giant television screens through to HD capable smartphones."
Switkowski's comments follow the release of new research today which predicts take-up of subscription video on demand (SVOD) services will rise by 300 percent by 2019, totalling 4.7 million subscribers across the country. But this rapid growth is expected to put a strain on Australia's broadband infrastructure, as Internet service providers work to ensure their network capacity meets the demands of delivering high quality content on demand.
The "Australian OTT Video" report from research group Ovum details that average monthly downloads on the NBN have increased 51 percent in the six months to September 2015, spurred on by the arrival of Netflix and Stan and the repackaging of Foxtel's SVOD service, Presto.
While Ovum says ISPs have so far met the demand, the growth in consumption will only continue.
And when Australians develop an expectation for HD content, delivered on demand and at speed at peak times of the day, Switkoski says the inevitable bandwidth squeeze will lead to some tough questions about how we treat Internet traffic.
"We've never had to have the kind of advanced neutrality debate that's happened in the US and in the European Union," he said. "But the arrival of OTT video, the surge in traffic over the network and the AU$50 billion that's already budgeted to be spent on the NBN will push us to have such a conversation."
Australian consumers might be concerned about getting full Netflix seasons when they drop or 4K movie streams in the future. But Switkowski says there is a real possibility that consumer desires around household entertainment may butt up against the needs of "productivity-enhancing businesses."
"This will raise the question of whether all packets are equal, the core of a Net neutrality position," he said. "There are very strong feelings on both sides of that debate and I think that debate will now unfold.
"We will have to start thinking very differently about the concept of treating all data equally, because to provision sufficient capacity in the network to fully enable Net neutrality you need to build in massive amounts of over-capacity to accommodate usage peaks."
According to Switkowski, providing the kind of bandwidth and network capability that ensures smooth sailing at peak usage times "can create big problems" for ISPs and the NBN because it "requires a substantial investment."
"At this stage, it's not an issue," Switkowski said.
But if the projections from today's Ovum report are anything to go by, Net neutrality could soon become an issue.