Telecom and EU representatives at MWC 2023 put more pressure on US Big Tech companies to help with future proof spending.
Who pays the bill for a telecommunications network? In a continued effort to answer the question, European Union telecommunications companies at the Mobile World Congress 2023 regulators pushed to make US technology giants – including Google – pay a share of the costs of maintaining the world’s busiest networks.
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What do these EU telecommunications providers want?
Orange, Deutsche Telekom and BT are among the EU organizations speaking out at MWC 2023, seeking changes from the US companies that make up the bulk of their traffic, That reports CNBC.
Telecom companies in particular want Google, Netflix, Meta, Apple, Amazon and Microsoft – which together generate almost half of today’s internet traffic – to help maintain the networks that deliver their content. These “fair share” fees would be used to keep the infrastructure running smoothly and roll out next-generation networks. Some fees would support physical infrastructure, such as new cables and antennas, as well as higher network speeds.
Several telecom companies have proposed network tariffs as a solution; this would essentially be a “load” to aid in network maintenance. However, opposing US tech companies say this would have negative consequences for consumers. BT also proposed to CNBC a “two-way model”, where the content provider pays the network operator in much the same way as consumers.
For telecommunications providers, such a deal could help them keep up with the increasing demand for faster services that carry more data. They may now have a better chance to speak up about it looking for a “fair share” of hyperscalers.
European Commission weighs in
The European Commission opened a consultation on the issue in February, sparking much of the conversation at MWC 2023.
A big change this year was that Thierry Breton, head of internal markets at the European Commission, took the side of telecoms. To fund proposed technologies such as the metaverse and next-generation mobile networks, EU telecom companies “need to find a financing model for the massive investments that are required,” he said, according to CNBC.
Breton also cautioned against viewing it as a debate only between telecom and content giants. Net neutrality is also a concern, as increased financial ties and information sharing between the two could lead to barriers to a free and open internet, such as throttling or preferential treatment for certain types of content.
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What would these changes mean for Big Tech companies?
Streaming content provider leaders, such as Netflix co-CEO Greg Peters, argue that the telecom “tax” would strain already fraying budgets and make it more difficult to produce quality programming. The number of Netflix subscribers nevertheless increased in the fourth quarter of 2022 stagnant sales growth. Some technology companies argue that they already pay for submarine cables and server farms and should not also pay for transportation.
Another consideration is net neutrality, as Breton mentioned. Could deals between telecom and big tech mean those who pay more to support infrastructure get better network access, undermining the net neutrality philosophy of an internet that gives equal priority to all services?
A possible compromise would be for network providers and content creators to coordinate in releasing content at staggered times. For example, streaming services could notify EU telecom companies of their schedule for blockbuster content. This could reduce the load on network traffic overall, but would require an additional level of coordination between content creators and network operators in different time zones.
“The challenge in Europe is it’s not so clear because you have an imbalance,” Paolo Pescatore, tech, media and telecoms analyst at PP Foresight, told CNBC. “The imbalance is not due to Big Tech, not to streamers and not to telcos. This is largely due to the old, outdated regulations.”
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