A recent study conducted by the Belgian Institute for Postal Services and Telecommunications (BIPT) posits that the argument for ‘fair share’ contributions from Big Tech, such as Netflix and Amazon Prime, to support telecom infrastructure costs and low margins, yet remains underdemonstrated. Regulators and organizations across the globe have been weighing the balance of this issue, striving to discern the feasibility of such a fee.
While the European Commission is currently deliberating this matter, the BIPT, the latest national regulator examining the scenario, has unveiled its findings. Following a thorough review period that included inputs from 22 organizations in response to a draft proposal launched in May, the BIPT formulated its insights on the upshots of ‘fair share’ on customer welfare and data traffic identification.
The Belgian watchdog, on data traffic drivers, concludes, “claiming that Big Tech is exclusively responsible for data streams might be oversimplifying matters”. Though acknowledging that the creations of tech titans possibly stimulate internet demand, the BIPT emphasizes that, “it’s actually the end-user who shoulders the brunt of rising data intensity by opting for pricier fixed subscriptions with higher speeds or mobile subscriptions offering more data.”
It further highlights substantial investments already being made by Content Application Providers (CAPs) in a wider infrastructure, such as data centres or content delivery platforms, serving the best interests of both ISPs and Big Tech.
The BIPT states, “CAPs and ISPs are economically interdependent since both robust networks and compelling content are crucial. Ensuring the reliable delivery of content to end customers necessitates significant investments from both parties.”
The regulator also notes the seeming contradiction of such ‘fair contributions’ to the principle of an open internet or net neutrality. It argues that imposing a mandatory fee would provide an ISP the power to manipulate a CAP’s traffic quality to negotiate payments, thus having a detrimental effect on the end-user, potentially increasing latency.
Moreover, it suggests such a move could impact smaller, local CAPs, reducing their motivation for expansion beyond the contribution limit, which ultimately hampers European companies from investing in data-intensive apps, big data, and cloud computing.
It cautions that ‘fair share’ payments could eventually be borne by end consumers, and there is no certainty that “contributions will necessarily be invested back into public good, like additional coverage or price reductions for consumers.”
Depending on the specific payment model, there may be additional disadvantages for local regulators and the EC, like higher costs for establishing a centralized fund for payments and additional resources needed to scrutinize potential net neutrality violations or misuse of termination monopoly.
These findings echo with the conclusions of other national regulators, like the German regulator and UK’s Ofcom, both also questioning the need for ‘fair share’, echoing BIPT’s skepticism.
As we wait for the EC’s verdict post the selection of a new commission in 2025, it is intriguing to see how many other nationwide regulators align with these views. Revisiting telecom regulations in the EU more broadly may reveal better ways to stimulate telco margins and not just shift expenses onto content providers.