Europe's leading telecom companies have urged the European Union to enforce a “fair” payment from Big Tech firms for utilizing their networks. The move marks the latest development in an ongoing dispute between the telecom sector and tech giants like Netflix and Google over payment structures.
Big Tech's Contribution to Network Infrastructure
Top executives from 20 major telecom groups, such as BT, Deutsche Telekom, and Telefónica, have penned an open letter emphasizing that tech companies benefiting the most from the telecom infrastructure should bear a larger share of the costs. The main positions of this letter had been outlied already in May this year by the Computer & Communications Industry Association.
The letter is set to be dispatched to the European Commission and the European Parliament members. The executives highlighted, “A fair and proportionate contribution from the largest traffic generators towards the costs of network infrastructure should form the basis of a new approach.” They further stressed the urgency for regulatory intervention to ensure future investments, especially as telecom companies are investing billions in the 5G rollout and transitioning to full-fibre networks.
Who's Behind the Initiative?
Prominent signatories of the letter include Timotheus Höttges from Deutsche Telekom, Christel Heydemann of Orange, José María Álvarez-Pallete at Telefónica, and Pietro Labriola from Telecom Italia. The initiative also garnered support from Philip Jansen, the outgoing BT chief executive, and his successor Allison Kirkby, currently the chief executive at Telia, along with Vodafone's CEO Margherita Della Valle. The letter proposes a payment system targeting only the most significant traffic generators, emphasizing the need for clarity and transparency in contributions to ensure investments are channeled directly into Europe's digital infrastructure.
Brussels' Stance on the Fair Share Initiative
The European Parliament voiced its support for the fair share initiative in June, advocating for a policy framework where major traffic generators equitably contribute to the funding of telecom networks, ensuring net neutrality remains unaffected. The European Commission estimated an additional investment of approximately €200 billion to achieve its connectivity goals by 2030. Although a consultation was initiated in February, the anticipated results by June have been postponed.
The letter's authors noted that data traffic has surged by 20% to 30% annually, predominantly fueled by a select group of large tech companies. While this growth trajectory is expected to persist, telecom groups are skeptical about realizing a proportional return on investment under the prevailing conditions. They argue that while Big Tech firms contribute minimally for data transport within their networks, some cloud providers impose charges on customers that are substantially higher for data transport from the cloud.
Tech Industry's Counterargument
Tech companies have historically resisted such proposals, asserting their significant investments in internet infrastructure, including data centers and subsea cables, in addition to content and services. Daniel Friedlaender, the head of CCIA Europe, which represents the tech industry, contended that telecom companies have expanded due to the innovative content and services crafted by tech and creative firms. He criticized the telecom sector's approach, stating, “Telcos want to get their networks fully subsidised by the same firms who have helped them grow and thrive.”
Calls for Regulatory Overhaul
The executive letter also advocated for a comprehensive revamp of telecom regulations. Industry leaders emphasized the necessity for scale to prevent market fragmentation. The sector is keenly awaiting the European Commission's verdict on a proposed joint venture between Orange and MasMovil in Spain, which is perceived as a litmus test for regulators' acceptance of further consolidation in Europe. In response, a commission spokesperson mentioned that their recent consultation addressed the “fair contribution” to network expenses, emphasizing the complexity of the issue and the importance of a well-informed decision.