If there is an extensive debate in Europe, it is undoubtedly about who should assume the investment to maintain and renew the telecommunications infrastructure. The most important operators in the region —Telefónica, Orange, Vodafone and Deutsche Telekom— believe that big technology companies such as Google, Apple, Netflix or Amazon, among others, have to make their economic contribution to the cause. Something to which the latter refuse. Reason why the European Commission has decided launch an exploratory query to shed light on the subject.
What the regulators of the European Union propose is that the public, as well as companies and organizations, provide their opinion on the matter. the survey will remain open for a period of 12 weeks, until the deadline of next May 19. However, the initiative has already been met with rejection by the CCIA, the association that brings together several of the companies that would be affected if the approach supported by the main telcos move on.
A few days ago, executives from the most important telecommunications operators in Europe defended their position in a public letter. Although they did not name any specific company, they did call on the “big content platforms” to help meet the costs of the region’s digital infrastructure. The letter bore the signatures of Jose Maria Alvarez-PalletePresident and CEO of Telefónica, Stephane RichardChairman and CEO of Orange, Nick ReadCEO of Vodafone, and Tim HottgesCEO of Deutsche Telekom.
The aforementioned directors consider that the situation today is untenable and that the ‘investment burden’ should be shared more proportionately. They even assure that their companies are today at a disadvantage when it comes to negotiating “fair terms” with the big technology companies, because they have too strong a position in the market. And they believe that if platforms continue to expand their use of networks, the connectivity experience of European users will only get worse over time.
«Today, the streaming Video, gaming and social media originating from just a few digital content platforms account for more than 70% of all network traffic. Digital platforms are benefiting from low-cost ‘hyperscaling’ business models, while network operators take on the necessary investments in connectivity. At the same time, our retail markets are in constant decline in terms of profitability.”
Statement by the CEOs of Telefónica, Orange, Vodafone and Deutsche Telekom.
The debate over investment in telecommunications in the EU heats up
As we said at the beginning, responsibility for investment in telecommunications infrastructure is a hot topic in the EU. In fact, during the launch of the exploratory query, Thierry BretonCommissioner for the Internal Market, assured that the return on investment in the field of communications is very low. And also blamed for the situation to the global geopolitical context and the rise in the prices of energy and raw materials.
However, he tried to detach himself from any attack on the big technology companies that could be affected by the situation. “I want to say right away that all this thinking is not directed against anyone at all, but is for our fellow citizens,” he said. Even so, he clarified that the economic contribution of the companies that today use the European networks, It is a debate that cannot be avoided.. Not just for wider availability of 5G and future technologies, but for achieving gigabit connectivity by 2030
“Today we are making sure that everyone, anywhere in the EU, has access to fast and secure connectivity. But a high-speed internet requires large investments. That is why, in addition to facilitating network deployment in the short term, we are exploring the important question of who should pay for the next generation of connectivity infrastructure, including whether platforms should share the cost of investment with telecom operators. ».
Thierry Breton, Commissioner for the European Internal Market.
Technology companies accuse the European Commission of promoting a tax on the use of the network
The Computer & Communications Industry Association (CCIA) It didn’t take long for him to cry out to the sky following the launch of the exploratory consultation of the European Commission. The entity, which includes among its members Apple, Google, Amazon, Twitter, Intel, Vimeo, Meta and Cloudflare, came out to respond harshly to the proposal for a shared investment to improve the telecommunications infrastructure.
The body even accused the telcos of “imposing a false premise of fair share“, which European regulators have included in the survey. So, ensures that the query has been created with a strong bias in favor of these companies, to justify subsidizing their operations. “The biggest leap forward in improving infrastructure deployment can be made by removing red tape and addressing the civil engineering capacity shortage in Europe,” the Washington- and Brussels-based association said.
Christian Borggreenfrom CCIA Europe, went a step further and ensured that implementing taxes on the use of the network it’s a terrible idea. “Europeans already pay telecom operators for internet access. They should not have to pay them a second time through payment services. streaming and in the cloud more expensive. Putting a fee on internet traffic would hurt European consumers and undermine the open internet by treating data differently. What we hear from the CEOs of the big companies telcos it’s just old wine in new bottles. Nothing has changed since this idea was last rejected by Europe a decade ago,” he explained.
A single example to discredit each other
A truly striking point of the debate on investment in telecommunications that has been reopened by the European Commission is how both parties involved —the operators and the content platforms— have chosen to use the same example to try to discredit each other.
We refer specifically to the case of Netflix and the popularity of The Squid Game in South Korea. The series became such a rage that SK Broadband, the country’s leading internet provider, sued the broadcast platform. streaming. Because? For not paying the expenses derived from the brutal increase in traffic on their network. Basically, the company wanted Netflix to take care of the maintenance costs of its infrastructure. Something to which the Americans drastically refused.
This situation led legislators to try to enact an updated version of their Telecommunications Companies Law, Informally known as the “Netflix Law”. His intention was that the large content providers, such as Google or the aforementioned Netflix, would pay fees for the use of the network. Something that until today divides the waters in the National Assembly, the unicameral body of the South Korean legislature.
The curious thing is that both the European telecommunications operators and the CCIA have referred to the case of South Korea to delegitimize each other in the debate on investment responsibility.
In his public letter, the CEOs of Telefónica, Orange, Vodafone and Deutsche Telekom pondered the approach of the Asians. “There are signs of change in other parts of the world. South Korea is discussing a national law to create regulatory conditions for a fairer contribution to network costs. This follows ongoing litigation after the increase in traffic driven by the series. The Squid Game“, they indicated.
While the association representing Amazon, Apple or Meta referred to the South Korean case as a fiasco. “In the future, CCIA Europe hopes that the Commission [Europea] take an evidence-based approach, especially since a similar regulatory experiment has already failed in South Korea,” he said.
Investment in telecommunications is a debate without a quick resolution
The only thing that remains clear, for now, is that the investment dilemma in telecommunications will remain unresolved immediately. In addition, the exploratory consultation of the EU regulators reopens the door to the debate on net neutrality. Something that has been the subject of hot disputes, especially in the United States and Mexico.
The European Commission acknowledges that this is not a simple matter and that the survey is part of an open dialogue with stakeholders. “This is a complex issue that requires a thorough analysis of the underlying facts and figures, before deciding on the need for further action. The Commission is strongly committed to protecting a neutral and open internet,” they said.
For now, the positions of the operators and large technology companies on investment in telecommunications They have a lot of “chicken or egg”. That is, they need each other regardless of which ones benefited or took advantage of the others first.
The telcos They must offer a state-of-the-art infrastructure to attract companies like Google, Meta, Netflix, Amazon or Microsoft to offer more and better products and services. And the bigtech they must generate sufficiently seductive proposals so that investment in telecommunications remains in permanent evolution. The prosperity of some is tied to that of the others, inevitably.
It remains to be seen what results the European Commission survey produces, and how it affects its future decisions on the sector.
