In a significant move that is bound to create ripples in the telecommunications industry, a group of 20 European telco CEOs, under the auspices of GSMA, have issued a letter that offers a profound message to EU policymakers. The primary thrust of the missive is the urgent need for a complete overhaul of the existing regulatory framework. Furthermore, the leaders have underscored the importance of Big Tech companies’ contribution towards infrastructure costs of telco service providers.
The burning issue currently at hand, as articulated in the letter, is the rapid surge in data traffic, which is growing at an astounding pace of 20–30% each year. Strikingly, the astounding rise is being propelled not by the plethora of businesses operating online but by a select few tech behemoths. The telcos, however, lament the absence of a fitting return on investment from retail customers.
This state of affairs has prompted telcos to prod the EU government to establish a unique mechanism. Such an arrangement would obligate these powerful tech companies to contribute a “fair share” of their financial resources towards the infrastructure they depend upon to provide their services. The framework would selectively target the highest traffic generators and introduce stipulations for transparency and accountability regarding contributions received.
The letter explains the benefits of this proposed measure, stating, “This measure would help recalibrate the market power along the value chain, addressing the existing irregularities.” It adds, “Telecom providers find themselves unable to negotiate suitable prices for data transport. In contrast, some cloud providers charge their customers up to 80 times as much for the onward transport of data from the cloud.”
The ‘fair share’ debate has been simmering for many months, with the EU Commission starting consultations in February. Advocates argue that network usage is skyrocketing—primarily due to traffic from a tiny number of major tech firms—and operators will find it challenging to meet demand without financial aid from these giants.
Detractors, led by Dean Bubley of Disruptive Analysis, argue that what telcos are asking for amounts to a double data delivery payment. The sender (Netflix, Google, etc.) pays for delivery, and then the receiver (the content user) also pays. The detractors also accuse telecom operators of perpetuating the myth of large traffic generators.
Also, critics warn against infringing on the Net Neutrality principles upheld by the EU, which ensures equal treatment of all data traffic. The signatories of the letter responded to these concerns, mentioning that any payment mechanism would maintain strict adherence to Net Neutrality rules.
This open letter, while not presenting any new angles to the ongoing debate, reinforces the fact that lobbying will persist from both sides. There is currently no sign from the EU Commission of a quick conclusion on this contentious issue.