Tensions between European telecoms and US big tech firms have reached a peak as telecommunications chiefs put pressure on regulators to force digital giants to share a few of the cost of constructing the internet backbone.
European telecommunications operators argue that giant Internet corporations, mainly American, have built their businesses on multi-billion investments of operators in Internet infrastructure.
Google, Netflix, goal, Apple, Amazon AND Microsoft generate almost half of all internet traffic Today. Telecom operators consider these corporations should pay a “fair proportion” to accommodate their disproportionate infrastructure needs and help finance the deployment of next-generation 5G and fiber networks.
The European Commission, the EU’s executive arm, launched a consultation last month to explore how to address the imbalance. Officials are looking for opinions on whether to require direct input from internet giants to telecommunications operators.
Big Tech corporations say this might mean an “internet tax” that might undermine net neutrality.
What are the telecommunications giants saying?
Leading telecommunications chiefs met technology corporations during the Mobile World Congress in Barcelona.
They regretted spending billions laying cables and installing antennas to meet the growing demand for the Internet without proper investment from Big Tech.
“Without telecommunications operators, without the network, there isn’t any Netflix or Google,” Michael Trabbia, director of technology and innovation at France’s Orange, told CNBC. “So we’re absolutely essential, we’re the entry point to the digital world.”
In a presentation on February 27, the CEO of the German telecommunications group Deutsche Telekom, Tim Hoettges, showed viewers an oblong illustration showing the scale of market capitalization amongst various industry participants. The American giants dominated this map.
Tim Hoettges, CEO of Deutsche Telekom, gives a speech at the Mobile World Congress.
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Hoettges asked attendees why these corporations couldn’t “contribute a minimum of a bit bit to the efforts and infrastructure we’re constructing here in Europe.”
Howard Watson, BT’s chief technology officer, said he sees advantages in the fee for big tech players.
“Can we run a two-way model where the customer pays the operator, but additionally the content provider pays the operator?” Watson told CNBC last week. “I feel we must always look into it.
Watson compared Google’s and Apple’s app stores, which charge developers a portion of in-app sales in return for using their services.
What did US tech corporations say?
Efforts to introduce network charging have been heavily criticized, especially by tech corporations.
Speaking at MWC on February 28, Netflix co-CEO Greg Peters called the proposals to have tech corporations pay ISPs for network costs a “tax” on internet traffic that will have a “negative impact” on consumers.
Greg Peters, co-CEO of Netflix, speaks during his keynote address on the way forward for entertainment at Mobile World Congress 2023.
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Peters said that requiring corporations like Netflix – which already spends heavily on content delivery – to pay for network upgrades would make it harder to create popular shows.
Tech corporations say carriers are already receiving money for infrastructure investments from their customers – who pay them for calls, texts and data charges – and that by asking internet corporations to pay for carriage, they are literally asking to be paid twice.
Consumers may find yourself absorbing the costs required of digital content platforms, which could ultimately “have a negative impact on consumers, especially during times of rising prices,” Matt Brittin, head of Google EMEA, said in September.
Tech corporations also argue that they’re already making large investments in Europe’s telecommunications infrastructure, including submarine cables and server farms.
Rethinking ‘Net Neutrality’
The “fair proportion” debate has sparked some concern that the principles of net neutrality – which says the internet ought to be free, open and provides no service priority – could possibly be undermined. Telecom operators say they will not be trying to violate net neutrality.
Tech corporations are concerned that those that pay more for infrastructure can recover access to the network.
Google’s Brittin said fair payments “have the potential to translate into measures that effectively discriminate between various kinds of traffic and violate end-user rights.”
One suggestion is to require individual negotiating agreements with Big Tech corporations, similar to the Australian licensing models between news publishers and online platforms.
“It has nothing to do with net neutrality. It has nothing to do with access to the network,” Sigve Brekke, CEO of Telenor, told CNBC on February 27. “It has to do with the burden of costs.”
Short term solution?
Operators complain that their networks are overloaded by the huge production of tech giants. One solution is to stagger content delivery at different times to reduce the load on network traffic.
Digital content providers could schedule the release of a latest blockbuster movie or game more efficiently, or compress the data they deliver to take the strain off networks.
“We could just start by having a transparent timeline of what is coming and when, and having the ability to have a dialogue about whether businesses are using the best way to move traffic and whether some non-time-critical content might be delivered on time.” different times?” Marc Allera, general manager of BT’s consumer division, told CNBC.
“I feel it’s actually a reasonably, relatively easy debate, although lots of the content is global, and what could also be seized in a single country and once may or is probably not seized in one other. the local level is actually an easy discussion.”
He suggested that the concept of net neutrality needed to be refreshed.
Not “binary selection”
The “fair proportion” debate is as old as time. For greater than a decade, telecom operators have complained about excessive messaging and media services comparable to WhatsApp and Skype on their networks.
There was one significant difference at this 12 months’s MWC – a high-ranking EU official was in the room.
Thierry Breton, European Commissioner for the Internal Market, delivers a speech at the Mobile World Congress in Barcelona.
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Thierry Breton, head of the European Commission’s internal markets, said the bloc must “discover a model to finance the obligatory massive investments” in the development of next-generation mobile networks and latest technologies comparable to the metaverse.
Breton said it was necessary not to undermine net neutrality and that the debate mustn’t be described as a “binary selection” between ISPs and Big Tech corporations.
According to Paolo Pescatore, technology, media and telecommunications analyst at PP Foresight, Breton’s presence at MWC seemed to reflect the bloc’s affinity for Big Telecom.
“The challenge in Europe is that it isn’t so clear-cut because there’s an imbalance,” Pescatore said. “The imbalance is just not attributable to Big Tech, it is just not attributable to streamers or telecom operators. This is principally due to the old, outdated regulatory environment.”
The shortage of cross-border consolidation and stagnant revenues in the telecommunications sector have created “the perfect mix to be unfavorable to telecommunications operators,” he said.
“The potential landing zone for the solution is a framework where telecommunications operators can negotiate individually with tech corporations that generate the most traffic,” Ahmad Latif Ali, IDC’s head of European telecommunications analytics, told CNBC. “Nonetheless, it is a highly contested situation.”
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