On the morning of September 28, Europe’s head of competition, Margrethe Vestager, met with one of the leaders of the movement to reduce the market power of big tech companies around the world.
Brendan Carr, a senior Republican at the Federal Communications Commission, the U.S. regulator, has warned tech giants such as Google and Netflix for the huge investments they are making in struggling telecommunications companies on both sides of the Atlantic. was trying to garner support for his campaign to make people pay for the network.
Such efforts to force tech companies to make what proponents call a “fair contribution” to network costs are nothing new and have been debated for a decade.
However, there are now signs that regulators in both Europe and the United States are in favor of the debate. And as momentum builds, heated debates between operators and tech groups are in the public eye.
In early September, the European Commission announced it would begin reviewing whether tech companies should shoulder more of the cost of telecom networks. Vestager said the issue needs to be considered with “a lot of focus”, adding that the technology group “doesn’t contribute to enabling investment in connectivity deployments”.
Meanwhile, the governments of France, Italy and Spain, which use taxpayers’ money to heavily subsidize network upgrades, sent a joint letter to the commission in August urging them to draft legislation quickly. I asked
“This is a ripe issue and a tipping point,” Carr told the Financial Times. “Gone are the days when Big Tech got out of hand”
“Hundreds of billions of dollars are needed to fund public network improvements, but current funding models are tight. The time has come,” he added.
Analysts at Deutsche Telekom say a change in legislation to make technology companies bear half of network capacity costs could bring the sector a windfall of €3-4 billion a year. I am predicting.
Telcos are spending tens of billions of dollars to upgrade existing copper networks to fiber to cope with rising data usage and the move to 5G.
But the tech group claims it is already making a generous contribution to internet infrastructure by investing in data centers and submarine cables and developing services that customers want to use on their smartphones and computers. , also said the proposal undermines the principle of “net neutrality”, which prohibits broadband providers from restricting users’ web access.
The debate has heated up amid a broad crackdown on market dominance by big tech companies and instances of anti-competitive behavior in the US and Europe. Earlier this year, Vestager imposed a record fine on Google for abusing Google’s dominance in the Android mobile system. The United States is looking to wipe out new restrictions on the biggest tech companies through the American Innovation and Choice Online Act, which has bipartisan support.
“There seems to be some political support in Brussels to consider the idea,” said Christian Booggreen, head of the European office of the computer and communications industry association, a technology lobby group.
This debate basically hinges on the fate of telecom groups and some of the biggest tech and streaming giants. The latter group saw their stocks soar during the pandemic as they became more dependent on their services.
Vittorio Colao, Italy’s minister for innovation and former Vodafone chief executive, told an FT panel last month: “Now that I’m a minister, looking at the situation in Europe, I see a big You can see the imbalance.
At the same event, Orange CEO Christel Heydemann admitted that operators were having trouble getting customers to pay more for increased traffic volumes.
“If you look at 2G, 3G and 4G, it means that we have a very competitive market in Europe because we haven’t been able to raise the prices consumers pay,” she said, adding that telecom companies are finding If not, charging for infrastructure used by large technical groups will force you to cut your investment.
Carriers and some legislators argue that the surge in video streaming, which has dramatically increased the data load on carriers, has made the problem even more urgent.
According to a report released earlier this year by European telecom lobby group ETNO, 56% of global traffic was generated by just six companies (Google, Meta, Netflix, Apple, Amazon and Microsoft) last year.
But Matt Brittin, Google’s president of European business and operations, insists the technology group is investing heavily in Internet infrastructure. Google has spent €12 billion on six large data centers in Europe, building 20 submarine cables around the world, including five in Europe, and allowing operators to store content in order to cope with the surge in traffic. He told his FT that he invested to help store it locally.
Netflix claims that the investment and development of high-quality online content and services is the primary driver of demand for its Internet services.
“Telcos are telling investors that surging consumer demand for data will be the engine of future growth, but in Brussels, EU lawmakers say more data traffic will make their business unsustainable. Just tell them,” Borggreen said.
He and others point to the fact that European telecom companies generally pay large dividends as a reason to choose to spend less on infrastructure upgrades.
Some analysts argue that redistribution measures of any kind will fail to address the root cause of European telecom groups’ struggle to monetize their capital spending.
Hosuk Lee-Makiyama, director of the European Center for International Politics and Economy, wrote:
He and others warn that this kind of tax could undermine technology groups’ incentives to invest in new technologies. Others suggest that there is a real risk that extra costs may be passed on to consumers through higher prices.
One of the most pressing issues in this debate is that no one has developed a clear proposal for how technology companies can contribute.
A theoretical possibility is direct payments from technology groups to telecom companies, but the question of how regulators can determine which groups are making donations remains unresolved. Alternatively, third-party funds or taxes could be collected by the government and distributed to carriers, but this is controversial and can be difficult to ring-fence.
“The real difficulty is finding robust and justifiable algorithms,” said one European minister. “The telecommunications industry [it] I don’t have the correct formula yet. ”
Additional reporting by Javier Espinosa