Large EU telcos call for more regulation on Big Tech

2 months ago 14

An association representing the largest European telecom operators threw yet another punch in their intensifying fight with US Big Tech over regulation in Europe, in a position paper published on Wednesday (26 June).

The European Telecommunications Network Operators’ Association (ETNO), an industry group comprising the largest telecoms operators in the EU, called for levelling the playing field with US Big Tech, the paper said.

The seemingly innocuous phrase represents a strong position in a heated debate over the future of Europe’s connectivity infrastructure.

Content providers like Netflix and YouTube are consuming an increasing amount of bandwidth. Telecom operators argue that they are shouldering the investment costs of providing telecom infrastructure while Big Tech is reaping most of the profits. On top of that, telecom operators have a heavier regulatory lift, they argue.

“Specific requirements on contract duration and termination, restrictions on bundled offers, and obligations to carry emergency communications […] still constitute regulatory discrepancies between us and communication services provided by US Big Tech,” Paolo Grassia, senior director of public policy at ETNO, told Euractiv.

The idea of a fee on content providers relative to the amount of traffic they generate appears to have lost steam in Brussels so the European Commission, and now telecom operators too, are turning to the idea of a regulatory level playing field.

“[The EU regulatory framework should] ensure a level-playing field by applying the same rules for comparable services,” ETNO’s document said.

The document is in response to the Commission’s February white paper on the future of telecoms, as well as the public consultation on the future of the sector in the EU, which closes on Sunday (30 June).

The Commission’s white paper kickstarted the debate on a level playing field, using the obscure concept of the “cloudification” of telecom infrastructures, meaning the convergence of telecom and cloud infrastructures.

It specifically listed a number of regulatory discrepancies between these two sectors regarding the scope of the EU’s 2018 telecom law, the European Electronic Communications Code (EECC).

Laszlo Toth, head of Europe at GSMA, the worldwide lobby organisation of mobile operators, told Euractiv that telecom regulations should evolve along with changes in technology, and possibly apply to the entire connectivity value chain.

Big Tech’s grip

Like most businesses, telecom operators are moving their IT infrastructures from in-house servers to the cloud, dominated by three US companies, often called hyperscalers: Amazon Web Services, Google Cloud, and Microsoft Azure.

In 2020, they represented between 75% and 90% of the EU’s cloud market share, the Dutch competition authority estimated.

At the same time, telecom operators around the world are seeing an increasingly large part of their bandwidth consumed by these digital companies. Netflix, Google, Meta, and Amazon consumed 45.7% of total broadband in France in 2022, the country’s regulatory authority Arcep said in a 2023 report.

However, there is no aggregated data at the EU level, a spokesperson for the EU body of telecom regulators (BEREC) told Euractiv.

Big Tech is also investing in telecom infrastructure: €89 billion between 2018 and 2021, according to a study commissioned by INCOMPAS, a US industry group that includes the likes of Amazon and Netflix, and conducted by London consultancy Analysys Mason. The study was later quoted by Brussels lobbies.

Most of those investments, however, are the tech companies’ own data centers.

Only about 6% of their total global investments in 2018-2021 went to transport and delivery networks, according to the same study. This includes subsea cables for data transfers and domain name services resolvers, which route traffic to the right internet addresses.

European telecom price cuts on the cards in next EU mandate

While most politicians and lawmakers have been discussing enlargement prospects for the EU, others have quietly worked to bring together EU citizens and their European neighbours in a much more technical but tangible way: telecommunications.

Big Tech’s response

“EU telecom operators have invested and grown successfully in the past years because consumers are using more [US Big Tech] online content and services,” said Daniel Friedlaender, head of office at the Computer and Communications Industry Association (CCIA), which represents Amazon, Google, and Meta.

Friedlaender told Euractiv that any regulatory changes would be artificial and would benefit only a handful of the largest EU telecom operators.

“Given the different nature of cloud providers and telecom operators, [a regulatory] extension is […] unjustified,” the CCIA wrote in May in a position paper signed by consumer association BEUC and a number of digital rights organisations.

“To extend the EECC’s scope could become a Trojan horse,” eventually introducing the senders-pay principle further, the CCIA said in February.

The senders-pay principle, also known as fair share tax, would charge the companies driving the largest amounts of telecoms’ bandwidth in the EU. The funds would be used for telecom operators’ maintenance and investment costs.

A number of different stakeholders opposed this initiative and BEREC rejected it, saying there was “no evidence of free-riding”.

Even though the senders-pay principle seems to have lost traction, ETNO’s document still expressed support.