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The letter is signed by 20 CEOs from most of Europe’s largest telecoms companies
Today, the GSMA has published an open letter from 20 European telco CEOs calling on EU policymakers to overhaul the regulatory framework and mandate Big Tech companies to help contribute to telco infrastructure costs.
“A revision of spectrum policy, accepting the need for scale to avoid market fragmentation, and a fair and proportionate contribution from the largest traffic generators towards the costs of network infrastructure should form the basis of a new approach,” reads the letter.
The letter argues that data traffic will continue to grow at 20–30% each year, with this increase “primarily driven by just a handful of large tech companies”, but the operators are failing to see a corresponding return on investment from retail customers.
As a result, the telcos are calling on the EU government to introduce a special mechanism by which these big tech companies can contribute their financial “fair share” to the infrastructure they rely on to deliver their services. The parties suggest this mechanism would only target “the very largest traffic generators” and would include “accountability and transparency on contributions received so that operators invest directly into Europe’s digital infrastructure”.
“This measure would rebalance the market power along the value chain, while addressing the current asymmetries: Big tech companies pay today almost nothing for data transport in our networks, far from covering the costs needed to expand networks and achieve the ambitious EU targets. Telecoms providers cannot negotiate adequate prices for data transport; by contrast, some cloud providers today charge their customers up to 80 times as much for the onward transport of data from the cloud,” said the letter, which also noted that the was currently no economic incentive for Big Tech players to reduce unnecessary data traffic.
The 20 signatories of the letter are below:
Thomas Arnoldner, CEO, A1 Telekom Austria Group
Ana Figueiredo, CEO and Chairwoman, Altice Portugal
Edward Bouygues, Chairman, and Benoit Torloting, CEO, Bouygues Telecom
Philip Jansen, Chief Executive, BT Group
Andreas Neocleous, CEO, CYTA
Timotheus Höttges, CEO, Deutsche Telekom
Oliver Loomes, CEO, eir
Christian Salbaing, Deputy Chairman, Hutchison Europe
Mike Fries, CEO, Liberty Global
Joost Farwerck, CEO and Chairman of the Board of Management, KPN
Christel Heydemann, CEO, Orange Group
Guillaume Boutin, CEO, Proximus Group
Sigve Brekke, President and CEO, Telenor Group
Michel Jumeau, CEO, TDC NET
José María Alvarez-Pallete, Chairman and CEO, Telefónica
Kjell Morten Johnsen, President and CEO, Tele2 Group
Allison Kirkby, President and CEO, Telia Company
Pietro Labriola, CEO and General Manager, TIM
Victoriya Boklag, CEO, United Group
Margherita Della Valle, CEO, Vodafone Group
The so-called ‘fair share’ debate has been raging on for many months now, with the European Commission launching a consultation into the matter back in February that is still ongoing.
As outlined in this letter – as well as numerous calls to action spearheaded by the European Telecommunications Network Operators’ Association (ETNO) over the past year – the operators argument for enforcing a ‘fair share’ contribution is clear enough: network usage is increasing, largely driven by traffic from a small number of major tech companies, and operators will struggle to keep up with demand without subsidies from these companies.
Detractors, however, suggest that this is merely an attempt by the operators to be paid twice for delivering data – once by the sender (e.g., Netflix or Google), and once by the receiver (the end-user of the content).
“It’s no different to the same nonsense they’ve been peddling about the (un)fair-share concept (aka Internet Traffic Tax) for the last year,” explained industry analyst Dean Bubley of Disruptive Analysis. “It includes the well-established lie / myth of the “large traffic generators”. As many observers – including various European regulators – have pointed out, most traffic is generated by user request, not by a company “sending” a movie or streamed video.”
“The €174 billion investment figure [‘the EU estimated that at least €174 billion of new investment will be needed by 2030 to deliver the connectivity targets’] is also irrelevant – it’s almost entirely about building out network coverage, plus upgrading to FTTH & 5G, not adding incremental capacity. Almost all the investment would still be needed even if resultant data traffic was zero,” he added.
Critics have also suggested that implementing such a tax could infringe on the Net Neutrality principles held by the EU, which ensure that all data traffic is treated equally regardless of content or origin. Today’s open letter does briefly touch upon this topic, noting that any payment mechanism would need to be “implemented in full compliance with Net Neutrality rules”.
Ultimately, this open letter does not really add anything new to the debate that has not already been said. Lobbying on the topic will no doubt continue for many months – perhaps even years – both by those for and against the introduction of such a tax. For now, there appears to be no sign of a conclusion from the European Commission.
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