Telcos are asking to share the cost of the networks with Facebook and Netflix

Europe’s four largest telecommunications groups are calling for the participation of the major technology groups active in social media and the promotion of video content at the cost of developing and maintaining networks.

In an open letter to the European authorities, the CEOs of Deutsche Telekom, Orange, Telefonica and Vodafone emphasize that the giants of video streaming, gaming and social media are benefiting from the billions invested in Europe’s telecommunications infrastructure and are asking for this. the financial burden to be shared in a more proportionate way.

“Today, video streaming, gaming and social media provided by some digital platforms represent over 70% of the data traffic on the networks. Digital platforms benefit from the overgrowth of their business models at minimal cost, while telecommunications providers “Investments in connectivity are needed,” said Tim Hottges, CEO of Deutsche Telekom, José María vlvarez-Pallete, President and CEO of Telefonica, Nick Read, CEO of Vodafone, and Stéphane Richard, President and CEO of Orange.

Telecommunications group leaders are based on a major distortion in the technology market. The need for data and fast connections is constantly increasing, at a rate of over 50% every year, as new digital services are developed. And if the shift to a “virtual world” (Metaverse) evangelized by companies like Mark Zagerberg’s Meta (formerly Facebook) progresses, the needs will increase even more dramatically.

At the same time that telecommunications providers are being called upon to increase the speed and capacity of their networks, they are unable to increase their revenue. Charges depending on the volume of data are definitely a thing of the past for fixed telephony connections and in a few years they will disappear from mobile connections as well.

At the same time, they point out that network operators are not able to negotiate fair terms with these giant platforms due to their strong market position, their bargaining power and the lack of a level playing field.

As a result, they say, “we can not have a sustainable return on our very significant investments, jeopardizing the further development of infrastructure. With large digital content platforms pushing for higher quality streaming, the gradual change in data traffic we are experiencing will continue to increase “If we do not rectify this imbalance, Europe will lag behind other parts of the world, ultimately degrading the quality of the experience for all consumers.”

The example of Korea

In their letter, the heads of the four major telecommunications groups also refer to interventions launched in other countries. They specifically mention the debate that began in South Korea over the creation of a national law that would require the inclusion of digital platforms in the costs of developing and maintaining networks.

The reason for this process in the Asian country, which has one of the most modern telecommunications networks in the world, was the launch of data usage by Netflix after the great success of Squid Game. In the last quarter of last year, about 5% of South Korea’s daily Internet traffic came from Netflix.

Under South Korean law, the largest users of the networks, which account for more than 1% of the total network traffic and have more than 1 million users, are required to pay special fees for the operation of the networks. SK Broadband has sued Netflix for failing to pay these special fees and litigation continues.

Similarly, in the US, a legislative initiative has been launched to establish a universal connectivity service across the country, funded by digital platforms.

This is not the first time that telecommunications providers have made such requests to European authorities, but the letter comes at a time when the EU is tightening its grip on US technology giants. “We warmly welcome the recent commitment of the European Commission to develop appropriate frameworks for” all market participants benefiting from the digital transformation (…) to contribute fairly and proportionately to the cost of public goods, services and infrastructure, “the letter said. However, “we now urgently call on legislators to lay down rules at EU level to make this principle a reality.”