EU suggests big tech may have to start paying for telco infrastructure

“They have not been contributing to enabling the investments in the rollout of connectivity,” Europe’s digital chief Margrethe Vestager said of tech giants such as Amazon, Netflix and Google.

Discussing complaints by European telcos that the costs of building out new comms infrastructure is battering their margins while Silicon Valley internet firms have been making money hand over fist selling services that make use of it, EU digital chief Margrethe Vestager has suggested the bloc thinks the telcos have a point.

She said in a news conference according to Reuters: “I think there is an issue that we need to consider with a lot of focus, and that is the issue of fair contribution to telecommunication networks. Because we see that there are players who generate a lot of traffic that then enables their business but who have not been contributing actually to enable that traffic. They have not been contributing to enabling the investments in the rollout of connectivity. And we are in the process of getting a thorough understanding of how could that be enabled.”

The European Telecommunication Network Operators Association – an alliance which includes many of the aforementioned aggrieves telcos – put out a document yesterday which amounted to a rephrasing of the previously made demands – that big tech should pony up for some of the cables that underpin their businesses.

This latest report makes the claim that €72 billion worth of GDP growth and an additional 840,000 jobs is on the table for Europe by 2025 via the telecoms industry if the internet giants were to plough €20 billion a year collectively into it. It also claims the top six tech firms make up over 55% of all telecom networks’ traffic.

“The EU has been determined in tackling power imbalances in the online and tech space,” said Lise Fuhr, Director General of ETNO. “With today’s report, we want to launch an open dialogue with policymakers, consumers and tech companies on how to address the specific imbalances in internet traffic markets. This is not a technical issue: it is about our ability to put Europe at the forefront of the global 5G and FTTH race”.

You can certainly see the argument – firms such as AWS and Google Cloud, Microsoft Azure have been making extraordinary amounts of money out cloud services for instance, and of course none of that would be doable without telcos and fibre cos keeping the lights on, so to speak.

The problem is that however the justifiable the complaint is its not as if any rules are being broken or bent simply by some firms being successful at running a business utilising the internet. The fact there is less margin in running cable underground than there is in serving digital advertising is just a feature of the respective industries, and it feels implausible to expect US companies to start essentially subsidising the infrastructure out of the goodness of their hearts in their own country – let alone in Europe.

And apart from anything else, even if the CEOs were convinced of the moral argument and recommend that the corporations they run should ‘do the right thing’ and shell out billions to fund 5G towers, investors and shareholders might well mutter about fiduciary duty and perhaps start feeling feel somewhat mutinous. In the age of social media companies do very much like to be perceived as morally and politically correct, but making public corporate statements is cheap, what’s being suggested by the telcos is not.

It makes sense then that the push by ETNO et al has been primarily directed towards the EU to force the issue – a scenario which in light of today’s statements now seems like more of a plausible reality.

 

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