The longstanding direct peering relationship between Deutsche Telekom and Meta, the company behind Facebook, has come to a contentious end. Deutsche Telekom has accused Meta of leveraging its negotiating power to undermine the legitimate concerns of the EU’s telecommunications sector. Meanwhile, Meta claims that Deutsche Telekom jeopardizes net neutrality, placing its German subscribers behind a virtual paywall.
The dispute dates back to the pandemic when, according to Deutsche Telekom, Meta ceased payments for direct network connections and pushed for a settlement-free agreement instead. This principle initially made sense; it allowed smaller content providers to compete with larger rivals by balancing the data exchanged.
However, today’s landscape sees large Internet companies, like Meta, sending significant amounts of downstream data to telecom networks. European operators have been urging content providers to pay for carrying their traffic. The arrangement with Meta followed this logic until the payments stopped from Meta. In May, a court in Cologne ordered Meta to pay a “double-digit million” euro sum in compensation to Deutsche Telekom.
Since the ruling, both companies have failed to reach a way forward. Meta prefers to keep the arrangement free, while Deutsche Telekom wants financial compensation. Consequently, Meta has opted to send its traffic through a third-party transit provider, with Deutsche Telekom expanding its transit capacity accordingly to prevent user disruptions.
Meta expressed disappointment over the breakdown in negotiations, emphasizing its numerous settlement-free agreements globally. “These relationships are the accepted global standard and operate settlement-free to either side because they benefit everyone: Content providers, like Meta, invest in products and services people want to use and telecom providers, like Deutsche Telekom, make money by charging for Internet access,” Meta stated.
Additionally, Meta highlighted its 2022 investment of €27 billion in network infrastructure, which alleviates costs for telcos by ensuring quick and responsive service delivery.
Despite this, Deutsche Telekom remains resolute. It stated, “This is not just about a difference of opinion between two companies, but about the question of whether the power of the strongest prevails on the Internet or whether there is a fair balance between all participants.”
The outcome of this standoff will likely set a precedent affecting the dynamics between large content providers and telecom operators, particularly in the European market.
