Tuesday, September 27, 2016

If Netflix, HBO Go and Hulu are Treated Like Linear Video, Then Zero Rating Should Not be an Issue

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The city of Pasadena, Calif. Plans to tax Netflix, HBO Go and Hulu accounts 9.4 percent starting Jan. 1, 2017.

At least 45 other California cities have been advised they too could tax their residents’ online viewing using their city’s existing tax rate for cable providers, at rates ranging from 4.5 percent to 11 percent.

Whatever your views on taxation of over the top Internet services, the move provides one more bit of evidence that traditional regulatory thinking now applies to OTT streaming. Colloquially, that attitude can be termed “if it walks like a duck, and squawks like a duck, it is a duck.”

At least for purposes of taxation, OTT is viewed the same as linear video service. That raises an interesting question, however. If OTT streaming video is the equivalent of linear video, as a type of service, and if linear video rules apply, then zero rating should not be an issue at all.

All linear video services zero rate use of bandwidth. That is why many Internet service providers have argued that managed services are not covered by network neutrality rules.

Managed services are not "Internet services."


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