European telecom providers today released a proposal calling on tech giants Meta, Google, Amazon, Microsoft and Apple to pay their “fair share” for 5G and superfast fiber broadband internet services across the continent.
More than 160 European mobile operators and telcos, including Orange, Deutsche Telekom, and Vodafone, are warning they will have to raise internet prices for consumers if tech giants don’t help foot the bill.
If content providers account for more than 5 percent of Internet traffic, they must pay network fees. Microsoft, Amazon, Meta, Google, Apple and Netflix account for more than 50 percent of all Internet traffic.
“The next generation of tech – everything from connected cars, to home automation, to virtual reality and the metaverse – will rely on high-speed mobile networks,” Michael Witts, director of communications for GSMA, which represents the mobile industry, told the Standard .
“But that costs money and it’s only fair that the companies that benefit the most, from the access to consumers we give them, help pay the costs.”
Would telcos block Facebook and Google, if their customers pay good money to access that content?
Omdia telecom analyst Brian Washburn
The GSMA says €174bn (£151.1bn) will need to be spent on European networks by 2030 to help them keep up with the rest of the world. In 2021, the total annual investment by European telecom companies amounted to €56.3 billion.
Meta, the owner of Facebook, and Google, disagree. They say telcos should not charge both consumers and content providers because it goes against the whole point of the internet as an open place where people can freely send and receive information.
“Allowing selected telecom operators to pay twice for the same infrastructure … will harm net neutrality, the structure of the open internet, as well as consumers without a guarantee of more investment in networks,” wrote Meta’s VP of public policy Markus Reinisch. a blog post on Wednesday.
Independent technology analyst Ian Grant says the row will affect us badly: “It’s terrible for consumers because the big tech guys are going to do one of two things: they’re going to build their own networks, or they’re going to raise prices. for advertising and search, which means you will pay more to buy goods online.”
Will we have to pay more for internet in the UK?
At this time we do not know. Although this is a European issue, UK telecoms industry insiders have told the Standard that they are watching the situation closely.
Last year, regulator Ofcom reviewed whether British telecommunications companies should be allowed to charge content providers for carrying their internet traffic.
An Ofcom spokesman told The Standard: “We have not yet seen enough evidence that this is necessary. However, we have proposed changes to our guidance which we believe will enable telecommunications providers to innovate and manage their networks more efficiently.
The dream of 5G is that one day people will be able to walk to play graphic-intensive virtual-reality video games on their mobile phones and that there will be artificially intelligent self-driving cars that constantly connect to the Internet to keep people safe.
However, this requires much more powerful and reliable mobile internet and fiber broadband services than we have today.
Vodafone, one of the UK and Europe’s biggest mobile operators, told the Standard that Europe “urgently” needs a connectivity update.
“Companies that derive the most value from telco investments in network infrastructure, such as large digital content generators that generate the most traffic, must make a fair and proportionate contribution to the cost of developing telecommunications networks.
“We need faster, wider roll-out of 5G and fiber networks – which require billions of euros in investment – to ensure that consumers and businesses can benefit from the latest digital services.”
The rollout of 4G and 5G has cost operators billions of pounds, but mobile networks are already being congested and 5G speeds are falling, the GSMA has found, due to an “exponential growth” in people using them to stream high-definition video and for gaming.
Mobile operators are expected to ensure that their networks are always able to handle internet traffic, The Standard understands, even when there are sudden peaks in network traffic, such as a large number of people streaming a live sporting event to their phones.
This means building an even bigger network with much more capacity. It’s like planning a party, but you don’t know how many people will show up – you just have to guess.
Are tech giants likely to pay?
European telcos have to get money somewhere, says Brian Washburn, a telecommunications analyst at research firm Omdia, but he doesn’t think they will have much leverage against the tech giants.
“Would telcos block Facebook and Google, if their customers pay good money to access that content?” asks Brian Washburn, a telecom analyst at research firm Omdia.
“It’s largely wishful thinking on the part of the operators.”
In fact, Mr Grant says analysts examining network capacity have found that European telcos have more than enough bandwidth to run 5G networks. He thinks the telcos are overstating the problem and their finances.
Mr. Grant believes that mobile operators just want a piece of the huge amount of money that the tech giants get from providing content services.
He thinks the row also has something to do with the prices telcos charge to connect the tech giants’ data centers to their networks, which has led to Microsoft and Google building their own fiber networks.
“I am completely unsympathetic to the telcos because they have abused their monopolies over the last 40 years and exploited the competition,” says Mr Grant.
“And I’m not sympathetic to big tech because they’ve exploited the tech regime mercilessly (to pay very little tax), and this is one reason why we don’t have our own European version of Google and Amazon.”
The solution, according to Mr Grant, would be for the EU to tax the tech giants on their actual sales. Another idea is for mobile networks to offer new technologies such as edge services – needed for autonomous vehicles – at a premium price, says Omdia’s Mr Washburn.
“One can always ask,” he says. “The answer may still be no, but you are always free to ask for money.”