by István Kopácsi
In its Digital Decade programme, the European Union has set ambitious goals to ensure the digital transformation of the economy and society, using the potential of these technologies - such as AI, 5G and even 6G, blockchain, cloud computing, IoT - to ensure sustainability, support climate and environmental policies. The EU wants to achieve this, among other things, by making gigabit-speed networks available by 2030 to all those who need or want such capacity, in addition, all populated areas should be covered by a high-speed wireless network with a performance at least equivalent to 5G. To deliver these ambitious developments, the EU requires that “All market actors benefiting from the digital transformation should assume their social responsibilities and make a fair and proportionate contribution to the public goods, services and infrastructures, for the benefit of all citizens in the Union.”[1]
The aims of the digital transformation are high and noble, but the problem - of course - starts with determining which market actors benefit and to what extent they should make a fair and proportionate contribution. This is the debate described below, in which telecom operators, the European Commission and the European Parliament are facing off against the Body of European Regulators for Electronic Communications (BEREC) and Big Tech companies.
In November 2021, the European Telecommunications Network Operators' Association (ETNO) issued a statement signed by the CEOs of 13 leading European telcos, stating that Big Tech companies should also contribute to the development of broadband networks.[2] This Fair Share contribution (or “senders-pay principles”) concept was confirmed in a new statement signed by 16 European telecom CEOs in September 2022. Of course, this idea is not supported by Big Tech companies. Matt Brittin, Google's EMEA head of business & operations, said that this move would upend many of the principles of the open internet.[3]
Telefonica, an active participant in the debate, has drawn attention to the telecom sector's view that, although it seems that the debate is about the distribution of contributions to development, the idea behind the Fair Share contribution is about ensuring that citizens and businesses can benefit from the digital transformation, and telecom infrastructure is the basis of the economy and the digital ecosystem.[4] Ensuring that Europe has the right infrastructure for the future is essential to ensure the competitiveness of European businesses and the welfare of European citizens. Telecom operators have collectively invested €500 billion over the last decade, relying on their consumers, to ensure that all Europeans, all consumers, can benefit as much as possible from digitalisation. The challenge we are facing today is that all these developments are being paid by only one side: the consumers. Digitalisation using this model would place an undue burden on consumers to finance investment.
BEREC, on the other hand, has warned the European Commission that they see no need to oblige Big Tech companies – which telcos say account for more than half of data internet traffic – to participate in network development, as they see neither a competition problem nor market failure. They added that it is highly doubtful that making Content and Application Providers (CAPs) pay Internet Service Providers (ISPs) would help achieve digital goals. They argue that such a charge would disadvantage smaller companies with a weaker bargaining position, could lead to price increases, discourage investments by Big Tech companies and could breach EU rules on net neutrality.[5]
However, it seems that the debate will be decided in favour of the telecom companies, against the views of BEREC and Big Tech companies.
On this issue, Thierry Breton, the European Commissioner for the Internal Market, launched a public consultation in February this year to test the issue of the contribution of large traffic generators to network costs.[6] At a conference in June, he said Europe is lagging behind in 5G coverage: in the US, 95% of the population has access to the service, compared with just 72% in Europe. It is clear that Europe needs to develop its infrastructure and – referring to the comments made by Big Tech companies and BEREC – he said that the fact that there will be actors who will have to pay more than others to contribute to the financing of this does not mean that net neutrality will be violated. By the way, ensuring net neutrality is also a value that the Digital Decade programme protects. As regards the public consultation, he noted that 437 responses had been received and that a report is expected by the end of the month which will form the basis for the next steps.[7]
Obliging Big Tech companies to contribute to the approximately €175 billion cost of network development by 2030 is not only signalled by the Commissioner's commitment, but also supported by the European Parliament's resolution of 13 June 2023 on competition policy.[8] In the resolution, Parliament gives clear guidance and “calls for the establishment of a policy framework where large traffic generators contribute fairly to the adequate funding of telecom networks without prejudice to net neutrality”.
[1]https://eur-lex.europa.eu/eli/dec/2022/2481/oj
[2]https://etno.eu/news/8-news/717-ceo-statement-2021.html
[3]https://www.reuters.com/technology/google-says-shared-network-costs-is-10-year-old-idea-bad-consumers-2022-09-26/
[4]https://www.telefonica.com/en/communication-room/blog/fair-share-for-the-benefit-of-european-citizens/
[5]https://www.reuters.com/business/media-telecom/eu-telecoms-regulators-group-criticises-forcing-big-tech-pay-5g-rollout-2023-05-19/
[6]https://www.euractiv.com/section/digital/news/eu-commission-launches-connectivity-package-with-fair-share-consultation/
[7]https://www.reuters.com/business/media-telecom/eus-breton-cites-telcos-investment-gap-big-tech-network-fee-push-2023-06-06/
[8]https://www.europarl.europa.eu/doceo/document/TA-9-2023-0227_EN.html
