- Commission launches consultation on whether tech companies should contribute to network costs.
- Questionnaire seeking views from telcos and tech providers on enactment of mechanism to collect payments from content providers, as well as their future investment plans.
- Consultation expected to take twelve weeks to complete.
The European Commission (EC) reportedly initiated a consultation on potential ‘fair share’ legislation with the issuance of a questionnaire to telecoms operators, including Telefónica, and content providers, such as Amazon, Google, and Meta, to garner feedback and evaluate the companies’ investment plans.
According to several media outlets, which claimed to have seen the 19‑page questionnaire, the consultation is expected to last for approximately twelve weeks.
The telecoms providers, also including Deutsche Telekom, Orange, Telecom Italia, and Vodafone, are pushing for the six largest content providers, which account for more than half of data internet traffic, to subsidise network costs, while the tech giants are claiming that the idea equates to an internet traffic tax that could interfere with Europe’s net neutrality rules to treat all users equally.
The questionnaire was said to be seeking views on whether content application providers and large traffic generators should contribute to network costs via a digital levy or fund at European Union (EU) or national level, or through a mandatory mechanism for direct payments. It went on to ask who should apply this mechanism, and whether it would negatively impact innovation, the internet ecosystem, and consumers, and proposed that a direct payment mechanism would come with requirements such as a mandatory ratio of ‘green’ investments to decrease energy consumption.
According to EURACTIV, the respondents were asked to define a threshold above which a platform would be considered a large traffic generator, for instance, based on the percentage of traffic on the network during peak hours.
Other questions in the document sought further information on the technology and telecoms providers’ investment and development plans such as for cloud infrastructure, and whether they consider there is an investment gap. Reuters cited one source as saying the EC had requested detailed business information that is usually confidential, including details on peering contracts.
The Commission is also seeking views on the regulatory response in other parts of the world on network fees, such as in Australia and South Korea, and the lessons learned from these.
Cash is king
Many European telcos have waged long‑running lobbying campaigns on the issue in Brussels and their home markets, often through industry bodies ETNO and the GSM Association. In Spain, it looks like such efforts have had an impact (Telefónicawatch, #163 and #169–#170). The Spanish state recently indicated its backing for Telefónica and peers in the ‘fair share’ debate, as well as echoing industry calls for a lower bar on industry consolidation.
The chief executives of Telefónica, Deutsche Telekom, Orange, and Vodafone issued a joint statement in November 2022 that amplified their calls over the last year for “large content platforms” to contribute to infrastructure costs. “The current situation is simply not sustainable. The investment burden must be shared in a more proportionate way”, they wrote.
Yet the controversial issue has divided EU governments. France, Italy, and Spain reportedly sent a joint position paper to Brussels in 2021 urging the EC to oblige tech companies to pay operators for using their networks in Europe. Earlier in 2021, however, Denmark, Estonia, Finland, Germany, Ireland, the Netherlands, and Sweden called for caution and a full, transparent debate before the Commission made any policy decisions.
An initial study by Body of European Regulators for Electronic Communications, the collective of Europe’s telecom regulators, found little evidence on economic grounds that would justify additional payments from big tech companies. However, the report stressed the findings were preliminary and that more analysis was needed (Telefónicawatch, #170).
Naturally, internet giants are opposed to any suggestion that they pay more to fund Europe’s digital infrastructure. Mostly recently, the European Internet Exchange Association weighed in, writing to European Commissioners Margrethe Vestager and Thierry Breton, and warning policymakers to be careful to “avoid accidentally creating new systemic weaknesses in critical infrastructure” resulting from new regulation.
