Optus joins iiNet with free-to-download Netflix offer for Australians

Optus' me-too on uncapped movies; might Telstra follow?

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Australia's second-largest ISP Optus has followed the third-largest, iiNet, by announcing Australians will be able to watch Netflix without the downloads counting towards their monthly data cap.

The announcement places pressure on Australia's dominant carrier, Telstra, to do likewise. But as Telstra is a major shareholder in pay-TV outfit Foxtel, it may struggle to make a business case for empowering a rival. Telstra's partner in Foxtel - News Limited - is likely to frown upon Telstra giving Netflix a leg-up!

That's not the only item of industry politics Netflix's launch will provoke: it also suggests Netflix is able to achieve something of a breakout in the Australian ISP market.

One of the oldest complaints from second-tier ISPs in Australia is that Telstra and Optus (and, before it was acquired, AAPT) didn't peer with other Australian operators. They behaved this way because the only routes out of Australia were operated by one of those three. That meant Australian internet service providers were forced to either buy expensive transit from one of the majors, or buy their own (expensive) international circuits and try to buy Internet backbone access for traffic landed in America.

The arrival of competing cables – particularly PIPE Networks' PPCs to Asia – ameliorated that argument somewhat, but the Australia-US route is still controlled by the carriers that co-own Southern Cross Cable Network, or Telstra over its Endeavour cable.

Even now, Australian Internet costs are still partly attributed to the concentration of ownership of international links, as CloudFlare claimed last year.

Even ahead of its arrival in Australia, Netflix's plans were hotly discussed in the context of Australian peering – for example, see the length (and occasional heat) of this thread at the Australian Network Operators' Group (Ausnog) mailing list.

As the initiator of that thread noted, if Netflix broke out of what's still referred to as the “Gang of Four” (GoF), it could be a game-changer in the Australian market, since Netflix is a big enough traffic magnet in its own right that the majors couldn't refuse to peer.

Optus' confirmation that it's going to offer unlimited Netflix content is a hint that this is what has come to pass. ®

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