The EU Commission wants corporations to share in network costs

Brussels In the future, Netflix should not only pay for the production of its series, but also for the data cables over which these series are streamed. This is what the European telecom providers want, and the EU Commission is also sympathetic to this idea. Such a law could cost Netflix and the other major US tech companies billions.

The planning for this is still in an early phase, but the two key commissioners seem to be quite in agreement that something should happen: The tech companies have not yet contributed to the expansion of Internet lines, criticized Competition Commissioner Margrethe Vestager in September. Internal Market Commissioner Thierry Breton said there would be proper consultation and then a legislative proposal.

Within the EU, there is agreement that “all market players who benefit from the digital transformation” should make a “fair and appropriate contribution” to the expansion of the infrastructure. This is how Parliament and the Member States have already put it.

This is bad news for tech companies. Because they don’t have much room for attack to prevent the Commission’s plans.

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The constellation is reminiscent of the debates about the major Internet regulations Digital Market Act (DMA) and Digital Services Act (DSA). US corporations lobbied hard against these laws for years, but the regulations have remained relatively undiluted and are just coming into force.

According to the study, participation could drive network expansion

The new discussion is driven by the European telecom providers. With more money, the networks could be expanded faster, which would benefit the economy as a whole, they argue. And so far, the only reason why the Internet companies – above all American ones – have not had to pay is because their sheer size means they are more powerful than the comparatively small telecom providers and therefore have more negotiating power.

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A study commissioned by the European Association of Telecommunications Network Operators came to the conclusion that sharing the costs with Internet companies would drive network expansion, which could increase economic output and create jobs. In addition, the climate damage caused by Internet use could be reduced, according to the study authors. From the point of view of the content provider, the data lines are a public good: No matter how much data you send, it costs you nothing.

But if the providers had to pay a small amount for each megabyte, they would pay attention to efficiency and reduce the data volume. In particular, they would be careful not to send any data that would not be of any use to the customer.

The study also lists the companies that would have to pay the most: Google services account for 21 percent of global Internet traffic. Facebook follows with 15 percent, then Netflix, Apple, Amazon and Microsoft.

data cable

According to the ideas of the European telecommunications providers, US companies should participate financially in the expansion of the Internet lines.

(Photo: dpa)

The telecom providers are targeting these companies. According to the study, a “fair solution” would probably be most likely to be accepted if it only applied to providers of a certain size.

Companies refer to previous investments

That could still become a risk: Even with the DMA, only particularly large companies are affected, which led to tensions between the EU and the USA during the legislative process. Even now, it would probably only be American companies that would have to pay, while the benefits would accrue exclusively to European companies.

The other side is now running a study that lists the investments the Internet companies are already making – not in data cables within Europe, but, for example, in submarine cables and data centers. Additional funds would hardly lead to better networks, it says there, but above all increase the profits of the telecom companies. Customers in particular would be harmed as a result.

“A lot of companies use cloud services. The costs would be passed on to them,” says Christian Borggreen, European head of the digital lobby association CCIA, in which Google, Apple, Amazon, Facebook and Microsoft are represented. “Telecom providers say that just a handful of companies handle a large part of the data flow. But that’s stupid and wrong,” he says. “It’s the end customers who request the data.”

The idea that Internet content providers should pay for the transport of data is not new. So far, corresponding suggestions in the EU have always failed.

But the telecom providers warn that data traffic could increase exponentially in the future and that they could no longer afford the necessary network expansion. The Internet companies see another reason for the newly revived discussion: After the successful adoption of DMA and DSA, the political climate is favorable for the new push against the Internet giants.

Unlike the DMA and DSA, however, there are now clear warnings from experts who fear that the Commission is making a fundamental mistake. The body of European regulators for electronic communications (BEREC) presented an analysis a few days ago.

It states that the Internet has proven that it can adapt to changing conditions such as increasing amounts of data. Interventions in the market need adequate justification. If new fees are levied by Internet companies without such justification, the experts warn of “significant damage to the Internet ecosystem”.

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