Should Game Companies Subsidise Telstra and Optus’ Data Rates?

Should Game Companies Subsidise Telstra and Optus' Data Rates?

Telcos want money from game companies

Telcos are complaining again, and this time about gaming traffic. Optus and Telstra are calling on gaming companies to help pay for the costs that data-heavy gaming traffic impose on telco networks.

Both Optus and Telstra have been vocal about the burden of gaming traffic, even though both telcos already charge customers extra for optimizing game play, as well as higher costs for the large data plans required to stream video games comfortably.

With such charges already in place, it’s obvious customers already cover the costs of heavy gaming traffic. So how reasonable is it for telcos to seek more money from gaming companies as well. Let’s take a look at all sides.

Optus and Telstra call out gaming companies over network usage

Andrew Sheridan, head of regulatory and public affairs at Optus, has attributed high spikes of data traffic during peak hours to gaming. According to Sheridan, the traffic spikes are “substantial”, and they typically surface whenever large updates are released for games like Fortnite and Grand Theft Auto.

Apparently, because those updates are large files that get downloaded by multiple gamers at the same time once they are released, they result in those significant spikes.

Sheridan makes another point – that as future games evolve to 8K, augmented reality and the likes, data demand will be even higher, leading to even more strain on networks.

Telstra’s head of networks, Nikos Katinakis, is on the same page as Optus. He suggests gaming companies should contribute, seeing as telco networks are vital to the value of modern games. He suggest that gaming companies should be “sharing the wealth that gets created” from the value that network usage brings.

Their overall suggestion is that game manufacturers contribute to improving network infrastructure, considering their games rely heavily on them, especially when updates are released for download.

Overall traffic grew as a result of COVID-19, not gaming companies, but will it last?

The reality is that COVID-19 has a lot to do with the network traffic spikes. During the peak of the coronavirus pandemic, measures taken to prevent its spread caused most Australians to stay at home. This meant more time on Australians’ hands.

In fact, during the height of the pandemic, data usage spikes weren’t the only thing straining telco networks. Telstra and Optus actually experienced network outages due to high volumes of voice calls as well.

Australia wasn’t alone either. An i3forum Insights study showed a 20 percent year-on-year increase in voice calls globally last March, when COVID-19 stay-at-home measures were common around the world.

And as far as data usage spikes, the pandemic resulted in that as well, and not only from gaming. There was an increased usage of smart devices and computers, in addition to video games, all contributing to high data increases.

But when the coronavirus pandemic winds down, will Australians still rely on data as much?

With Aussies going back to work, school, and normal daily activity, we can assume most people won’t have as much time on their hands to game as much as they did during the height of the pandemic.

And if that is the case, then telcos will eventually have nothing to complain about as data usage returns to normal.

Final words – Extra charges on customers already subsidize heavy data usage

Telcos have a point – data-heavy games can strain networks, especially when thousands of gamers download large updates at the same time. But the fact is that telcos have already instituted charges for such heavy data users.

Telstra’s Game Optimizer and Optus’ Game Path both target gamers, charging them extra to improve their gameplay experience. Specifically, those extra services reduce lag during gameplay, so they don’t necessarily target large update files downloads. But they are extra charges all the same, so why seek even more money from gaming companies?

Beside, gamers who rely heavily on data have to purchase large data plans to handle such heavy data usage. Such plans cost a lot more than small or medium plans, so why should telcos complain about customers who actually use up the data that they have paid for?

To drive his point home, Mr. Sheridan tries to lean on customers who don’t use a lot of data. According to him, such customers are subsidising heavy gamers because they use a lot less traffic. So while heavy data gamers use the vast majority of data, those other customers cover the costs.

But this thought process, even if accurate, ignores our previous point: The fact that telcos set the price for data plans themselves, and therefore are in no position to complain when customers actually use all of the data inclusions in those plans.

Neil Aitken

Having worked in 3 countries for 4 telcos on both voice and data products, Neil is in a position to give you the inside track. Get beyond the marketing messages to the best plan for you.