The CEOs of 13 large European telecom companies today called on tech giants—presumably including Netflix and other big US companies—to pay for a portion of the Internet service providers’ network upgrade costs. In a “joint CEO statement,” the European telcos 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 one that AT&T and other US-based ISPs have made at times over the past 15 years, that tech companies delivering content over the Internet get a “free” ride and should subsidize the cost of building last-mile networks that connect homes to broadband access. These arguments generally don’t mention the fact that tech giants already pay for their own Internet bandwidth costs and that Netflix and others have built 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:
Large and increasing part of network traffic is generated and monetized by big tech platforms, but it requires continuous, intensive network investment and planning by the telecommunications sector. This model—which enables EU citizens to enjoy the fruits of the digital transformation—can only be sustainable if such big tech platforms also contribute fairly to network costs.
Technology Growing calls for payments from Big Tech
The European telcos didn’t mention any specific tech giants, but Reuters wrote today that “US-listed giants such as Netflix and Facebook are companies they have in mind.” The letter also discusses other regulatory topics related to fiber and mobile broadband, saying that “regulation must fully reflect market realities… Namely, that telecom operators compete face-to-face with services by big tech.”
The European ISPs’ letter isn’t the only recent example of ISPs claiming that tech giants should help them pay for network upgrades. “South Korean Internet service provider SK Broadband has sued Netflix to pay for costs from increased network traffic and maintenance work because of a surge of viewers to the US firm’s content,” Reuters reported on October 1.
The traffic surge was driven in part by the show Squid Game. The Seoul Central District Court ruled against Netflix in a related case in June, finding that it is “reasonable” for Netflix to be “obligated to provide something in return for the service” provided by SK, Reuters wrote.
Technology BT annoyed by net neutrality
The CEO of BT Group’s consumer division, Marc Allera, recently argued that net neutrality rules should be changed to let ISPs demand payments, as The Guardian reported on October 10:
Allera says the rules that stop companies such as BT from passing on some of the costs to the biggest drivers of the capacity growth—net neutrality rules that stipulate that all Internet traffic is treated equally—are outdated for the streaming era.
“A lot of the principles of net neutrality are incredibly valuable, we are not trying to stop or marginalize players but there has to be more effective coordination of demand than there is today,” he says. “When the rules were created 25 years ago I don’t think anyone would have envisioned four or five companies would be driving 80 percent of the traffic on the world’s Internet. They aren’t making a contribution to the services they are being carried on; that doesn’t feel right.”
The Guardian article said the companies driving 80 percent of the traffic were YouTube, Facebook, Netflix, and Activision Blizzard, but it isn’t clear where that data came from or whether it’s accurate. A May 2020 report by the vendor Sandvine found that YouTube accounted for 15.9 percent of home-Internet traffic globally during the first months of the pandemic, compared to 11.4 percent for Netflix and 3.7 percent for Facebook.
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All video streaming combined accounted for 57.6 percent of traffic. Social networking accounted for 10.7 percentm and general Web browsing clocked in at 8.1 percent. The entire gaming category accounted for 4.2 percent, slightly less than the “marketplace,” “messaging,” and “file sharing” categories. Of course, those numbers are probably a bit different now, but it doesn’t seem likely that four companies account for 80 percent of all Internet traffic worldwide.
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