Netflix has revealed that it regrets striking deals with iiNet and Optus which provide unmetered access to its streaming services.
The internet darling dropped the bombshell in a letter to shareholders, less than a fortnight after launching in Australia.
It said it agreed to unmetered content deals with the ISPs so customers would not be constrained by the data download caps common to internet plans in Australia.
"Data caps inhibit internet innovation and are bad for consumers," Netflix said.
"In Australia, we recently sought to protect our new members from data caps by participating in ISP programs that, while common in Australia, effectively condone discrimination among video services (some capped, some not).
"We should have avoided that and will avoid it going forward".
Netflix's regret stems from the idea that providing unmetered access to some video services but not others creates a net neutrality problem - where certain traffic is being favoured over others.
"Our belief [is] that ISPs should provide great video for all services in a market and let consumers do the choosing," the company said.
Will you pay for data?
So what does that mean for the Australian customers of Netflix who have signed on to unmetered access through iiNet or Optus?
The first thing to know is that the unmetered access is likely to be time-limited anyway. Optus does not guarantee unmetered access to Netflix Australia beyond 17 April 2017.
An iiNet spokesperson would not be drawn on an end date for its own offer.
"We plan to continue unmetering Netflix traffic," the spokesperson told Information Age. "Our customers are loving the product."
The reception to Netflix's local arrival is not in doubt - within a week of opening in Australia, iiNet's network service manager Roger Yerramsetti said "some areas" were seeing traffic levels six months ahead of projections.
"Under the bonnet we have been rapidly upgrading our network to keep pace with the demand and to ensure we're continuing to provide a high quality service," Yerramsetti said, before adding: "No plans to pull the unmetering!"
Telecommunications analyst Paul Budde told Information Age he didn't believe Netflix would attempt to unwind agreements over unmetered data with Optus and iiNet before their natural expiry.
"It depends a lot on the contract arrangements and the penalties, but I think they would just let the contracts run," Budde said.
"If Netflix feels so strongly about it then they might come up with some compensation and buy themselves out of the arrangements, but I don't think its a real big issue here."
Budde believed Netflix would not have paid Optus or iiNet to guarantee unmetered access to the popular streaming service, meaning it could not predicate any future payments on the ISP moving to a net-neutral model.
"What they say is 'Listen, we increase the marketing value of your brand by having Netflix attached to it, and in general terms if you've got good network operations then the extra amount of data that is used is not going to cost you a lot of money'," he said.
"On the other side, Netflix also has a very efficient way delivering content therefore the bandwidth used doesn't cost that much money."
Budde said ISPs had to decide if the marketing benefits of a Netflix association outweighed any network costs.
"That, in general terms, is the sort of deal Netflix is looking at," he said. "It wants to sell it as a win-win situation for both parties."
However, it seems unlikely that marketing value alone will keep these arrangements intact in the longer term.
Optus has already revealed it is considering levying fees on streaming operators to guarantee quality of service - which could raise the cost of such services in future.
