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Charging Content Providers: Impact on Network Investment and Consumer Choice

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The debate over whether telecoms companies should be allowed to charge content providers for carrying their traffic continues. Digital minister Volker Wissing praising the open and free internet, declaring he does not support intervening in the market. The European Commission’s consultation on the future of electronic communications and infrastructure explores whether big traffic generators, like Facebook, YouTube and Netflix, should financially contribute to network rollout costs.

Telecoms argue that this is about network investment rather than profit. Yet, there is little discussion on what would happen if large traffic generators refuse to pay and withdraw their services from networks that charge them.

Digital minister Volker Wissing stated that charging content application providers (CAPs) would put smaller players at a disadvantage. It would render Europe a less attractive location for business, and potentially result in higher fees for consumers as content firms would seek to recoup their costs. Wissing’s opinions are aligned with the German Federation of Consumer Organisations, which cautions that levying fees on CAPs would lead to less content and choice at higher costs. Both telecoms and consumers cringe at the thought of big traffic generators refusing to contribute and withdrawing their services from networks that charge them.

One of the leading proponents of fair contribution, Vodafone, has warned that Europe’s digital future is threatened unless there is a regulatory reboot. The UK-based firm states that nearly 20% of expenditure on network upgrades could be directly linked to managing traffic growth driven by major over-the-top companies. The company argues that although telecoms companies desire to keep investing in network upgrades for the benefit of Europeans, they cannot continue to bear that cost alone.

Likewise, industry groups ETNO and the GSMA have made similar arguments in a joint submission to the European Union’s consultation. Despite their lobbying, they fail to mention what would happen if the big traffic generators do not concede and chose to withdraw their services from networks seeking to charge them.

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