Leading telecoms operators have long been calling on regulators to do something about the escalating data traffic created by large streaming platforms such as Netflix – that has put their networks under increasing pressure.
Four major European telcos have now said that enough is enough, and are demanding legislation at European Union level to force the platforms, aka Big Tech, over-the-top providers or hyperscalers, to pay their fair share of network investments.
Timotheus Höttges, CEO of Deutsche Telekom (DT), Stéphane Richard, outgoing chairman and CEO of Orange, José María Álvarez-Pallete, chairman and CEO of Telefónica and Nick Read, CEO of Vodafone, penned a joint statement saying the current situation is simply not sustainable.
Flagging it up: The CEOs of Deutsche Telekom, Orange, Telefónica and Vodafone say the current situation with regard to network investments is unsustainable. (Source: Andrey Kuzmin/Alamy Stock Photo)
Citing the Sandvine Global Internet Phenomena Report from January 2022, they point out that video streaming, gaming and social media "originated by a few digital content platforms" accounts for over 70% of all traffic running over the networks.
"The investment burden must be shared in a more proportionate way," the four CEOs insist.
"Digital platforms are profiting from hyper scaling business models at little cost while network operators shoulder the required investments in connectivity. At the same time our retail markets are in perpetual decline in terms of profitability."
They also warn that Europe risks falling behind other regions of the world if it does not take steps now, "ultimately degrading the quality of experience for all consumers."
They point to South Korea, which is discussing a national law to create regulatory conditions for a fairer contribution to network costs – in part as a result of the huge popularity of Netflix series Squid Game.
"And in the US, policymakers are moving towards universal service also funded by digital platforms," the CEOs state.
Although the joint statement did not explicitly mention net neutrality, the CEOs complained that network operators "are in no position to negotiate fair terms with these giant platforms due to their strong market positions, asymmetric bargaining power and the lack of a level regulatory playing field."
This reflects recent comments by Marc Allera, the CEO of BT's consumer arm, who pointed to the "total lack of coordination on lots of data-intensive events."
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"Everyone's networks are under pressure and everyone's Internet becomes more unstable than it was before," Allera said.
While the CEOs of DT, Orange, Telefónica and Vodafone have taken heart from recent commitments by the European Commission to ensure that all market players make a "fair and proportionate contribution" to infrastructure costs, they want legislators "to introduce rules at EU level to make this principle a reality."
"The clock is ticking loudly, particularly given the huge investments still required to achieve the connectivity targets for 2030 set by the European Commission in its Communication on the European Digital Decade. Without an equitable solution, we will not get there," the statement concluded.