European operators demand EU legislation to force OTT companies to bear network construction costs

Light Reading reports: Leading telcos have long called for regulators to take action against the ever-increasing data traffic brought on by big streaming platforms such as Netflix – which has brought an ever-increasing amount of data to telcos’ networks

The big four European telecom operators now say they have had enough and are calling for legislation at EU level to force these platforms, be it Big Tech, OTT providers or hyperscalers, to pay for the networks they are rightfully responsible for investment share.

Timothéus Höttges, CEO of Deutsche Telekom, Stéphane Richard, outgoing CEO of Orange France, José María Álvarez-Pallete, chairman and CEO of Telefonica, and Nick Read, CEO of Vodafone, issued a joint statement saying the current situation is not sustainable.

They cite Sandvine’s Global Internet Phenomena Report, released in January 2022, stating that video streaming, gaming and social media “generated by a handful of digital content platforms” account for more than 70 percent of all traffic on the web.

Figure: The network traffic of the world’s top Internet companies accounted for more than half of the new crown epidemic. Source: Sandvine.

“The investment burden must be shared in a more balanced manner,” insisted the four chief executives.

“Digital platforms are profiting from hyperscale business models at very low cost, while network operators are taking on the investment required for connectivity. At the same time, our retail market profitability has been declining.”

They also warn that if Europe does not act now, it risks falling behind the rest of the world, “ultimately reducing the quality of experience for all consumers.”

They noted that South Korea is discussing a national law that would create regulatory conditions for a more equitable sharing of internet costs — in part because of the popularity of Netflix’s “Game of Squids.”
“In the US, policymakers are also turning to universal services that are also funded by digital platforms,” the CEOs said.

While the joint statement did not explicitly mention net neutrality, the CEOs complained that “network operators are unable to negotiate with these mega-platforms due to their own strong market positions, asymmetric bargaining power between the parties and lack of a level regulatory playing field. Fair terms.”

It also echoes recent comments by Marc Allera, chief executive of BT’s consumer division, who noted “a complete lack of coordination on many data-intensive events.” Marc Allera said, “Every operator’s network is suffering from stress, everyone’s internet has also become more unstable than before.

While the chief executives of Deutsche Telekom, Orange, Telefónica and Vodafone were heartened and encouraged by the European Commission’s recent commitment to ensure that all market players make a “fair and proportionate contribution” to infrastructure costs, they hope that lawmakers ” Introduce regulations at EU level to make this principle a reality

The joint statement concluded: “Time is running out, especially given that huge investments are still required to achieve the 2030 connectivity targets set by the European Commission in its European Digital Decade of Communication. Without a fair solution, We will not be able to achieve our goals.”