European telecom companies seek network investment from major broadcasters and technology

The EU should require major tech and video streaming companies to pay at least the estimated 28 billion euros they pay European telecoms groups for overusing their network infrastructure, according to a new report. New industry report.

A small number of video, social and tech companies – including Facebook owners Meta, Netflix and Amazon – account for more than 55% of all traffic on mobile and broadband networks, according to the study. by the European Association of Telecommunications Network Operators and by the consulting firm Axon. They say this costs European telecommunications companies between 15 billion euros and 28 billion euros per year.

The report asserts that if some of these data-hungry tech groups hand over 20 billion euros to telecom companies to cover and increase network investment, it could create 840,000 new jobs by 2025 and reduce significant energy consumption in this sector, as it will drive new spending on 5G and fiber.

“We want to open an open dialogue with policymakers, consumers and technology companies about how to address specific imbalances in the internet traffic market,” said Lise Fuhr. , said the general manager of ETNO.

Telecommunications companies have been embroiled in a years of debate with regulators about whether large tech companies, which use a significant portion of network data, should pay for some costly upgrades to infrastructure made by mobile service providers. mobile and broadband do or not, including the billions of dollars spent on 5G and full fiber rollout.

Executives pointed to a recent case in South Korea where a court ordered Netflix to pay for an increase in traffic over SK Broadband’s network late last year due to the series’ success Squid fishing game.

The chart shows telecom groups complaining of weak growth relative to major tech companies.  The first chart shows the revenue, the second chart shows the Market Cap (2015 vs. 2021) for both Fang, Japanese telecoms, US telecoms and telecom companies EU.

They hope that EU lawmakers will sympathize with their cause, pointing to a statement released by the European Commission as part of its digital rights statement that “all market players Schools all benefit from digital transformation [should] contribute fairly and commensurately to the cost of public goods, services and infrastructure”.

The most effective method for the commission to extract contributions from major tech companies, the report said, is to create a mechanism for direct payments to infrastructure projects or to telecommunications groups themselves.

Arguing that creating a separate fund for investment or imposing taxes would make the process too complicated and difficult to sell to the wider public.

The report shows how European telecommunications groups have invested €500 billion over the past decade to upgrade and improve their mobile and fixed networks, and are in a much weaker financial position than they are. similar companies in the technology sector. The top eight telecommunications groups have a combined market capitalization of 240 billion euros, compared with more than 7 billion euros for the top six technology groups, it noted.

The graph shows that the six major tech companies account for 55% of global network traffic, (percentage, 2021) being Google, Facebook, Netflix, Apple, Amazon and Microsoft.

The major video streaming and technology companies counter that they also contribute to the cost of network upgrades and that their accompanying agreements with telecoms help attract and retain customers, creating value shared value.

“We work with European internet service providers to make the network more efficient,” said Netflix. For example, we invested heavily in our own content delivery network called Open Connect.”

They added that the more than 700 so-called “caching” locations they’ve built in Europe – meaning content is stored locally and doesn’t travel far – has reduced traffic on the ice network broadband, improve user experience and save costs.

Amazon declined to comment. Meta did not respond to a request for comment.

Matthew Howett, an analyst at Assembly Research, said the tech teams were right to point out that they contributed to the content delivery. “Therefore, the question is whether it will be enough to meet the demands placed on network infrastructure providers.”

Although previous attempts to change the rules in Europe have been unsuccessful, Howett argues that policymakers’ better awareness of the environmental benefits of network upgrades and the importance of of connectivity during the Covid-19 pandemic, which could pave the way for a different outcome. .

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