Big Tech firms should pay ISPs to upgrade networks, telcos in Europe claim

Getty Images | Alicia Loeb

CEOs at 13 large European telecoms companies have called on tech giants – likely including Netflix and other big US companies – to pay part of the costs of upgrading their ISP’s network. In their “Joint CEO Statement,” European telecoms companies described their proposal as “a renewed effort to rebalance the relationship between global technology giants and the European digital ecosystem.”

The letter makes an argument similar to the one that AT&T and other ISPs in the US have made sometimes over the past 15 years, that tech companies that deliver content online get a “free” ride and should subsidize the cost of building last-mile networks that Connecting homes to broadband access. These arguments generally fail to mention the fact that tech giants are already paying for their internet bandwidth and that Netflix and others have created their own content delivery networks to help deliver the traffic that home internet customers choose to receive.

Today’s letter from European ISPs was signed by the CEOs of A1 Telekom Austria Group, Vivacom, Proximus Group, Telenor Group, KPN, Altice Portugal, Deutsche Telekom, BT Group, Telia Company, Telefónica, Vodafone Group, Orange Group and Swisscom . They wrote:

A large and growing portion of network traffic is generated and invested through large technology platforms, but it requires continuous and extensive network investment and planning by the telecom sector. This model – enabling EU citizens to enjoy the fruits of digital transformation – can only be sustainable if these large technology platforms also contribute equitably to network costs.

Growing calls for payments from major tech companies

The European telecom companies didn’t mention any specific tech giants, but Reuters wrote today that “US-listed giants like Netflix and Facebook are companies they’re considering.” The letter also discusses other regulatory issues related to fiber and mobile broadband, saying that “regulation should fully reflect market realities…that is, telecom operators compete head-to-head with services provided by major technology companies.”

European ISPs rhetoric isn’t the only recent example of ISPs claiming that tech giants should help them pay for network upgrades. Reuters reported on October 1 that “South Korean internet service provider SK Broadband has sued Netflix to pay for increased network traffic and maintenance work due to the increased viewership of the US company’s content.”

The traffic increase was driven in part by show squid game. The Seoul Central District Court ruled against Netflix in a related case in June, finding it “reasonable” that Netflix was “obligated to offer something in exchange for the service” provided by SK, Reuters writes.

BT is bothered by net neutrality

Mark Allera, chief executive of BT Group’s consumer division, recently argued that net neutrality rules should be changed to allow ISPs to claim payments, as the Guardian reported on October 10:

Alera says the rules that prevent companies like BT from passing some costs on to the biggest drivers of capacity growth — network neutrality rules that treat all internet traffic equally — are outdated for the age of streaming.

“A lot of network neutrality principles are incredibly valuable, we’re not trying to stop or marginalize players, but there has to be a more effective coordination of demand than there is today,” he says. “When the rules were set 25 years ago, I don’t think anyone would have imagined that four or five companies would drive 80 percent of the world’s internet traffic. They don’t make a contribution to the services that are being provided; that just doesn’t look right” .

The Guardian article said the companies driving 80 percent of the traffic are YouTube, Facebook, Netflix and Activision Blizzard, but it’s not clear where that data came from or whether it’s accurate. A May 2020 report by seller Sandvine found that YouTube accounted for 15.9% of internet traffic from home globally during the early months of the pandemic, compared to 11.4% for Netflix and 3.7% for Facebook.

All streaming videos combined accounted for 57.6 percent of the traffic. Social networks accounted for 10.7 percent, and overall web browsing was 8.1 percent. The entire gaming category accounted for 4.2 percent, just below the ‘Market’, ‘Messaging’ and ‘File Sharing’ categories. Of course, those numbers might be a little different now, but four companies don’t seem to account for 80 percent of all internet traffic worldwide.

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