EU Considers Charging Data-Heavy Streamers for Telecom Upgrades

The European Union is considering a proposal that would make technology companies that use the most bandwidth, like Netflix Inc. and Alphabet Inc., help pay for the next generation of internet infrastructure, according to a draft document seen by Bloomberg.

The European Commission has proposed that large tech companies should help pay for the infrastructure needed to support their data-heavy services. The draft document suggests that firms could contribute to a fund to offset the cost of building 5G mobile networks and fiber infrastructure, as well as the creation of a mandatory system of direct payments from tech giants to telecom operators.

The commission also asked companies whether there should be a threshold that would qualify a company to be a “large traffic generator,” the document showed. That could be similar to the European governing body’s rules designating some tech companies as “gatekeepers” and “very large online platforms” in its recent competition and online content rules.

A concrete proposal for regulating online content providers like Netflix and YouTube is still a ways off, although it has already generated controversy. In October, the EU's electronic communications regulator found that there is "no evidence" that these platforms should pay telecom companies to invest in internet infrastructure. Such a move could cause "significant harm to the internet ecosystem," the regulator said. The consultation on the proposal will remain open for two to three months.

A spokesperson for the European Commission declined to comment.

As data usage increases on networks, the need to protect investment in network infrastructure becomes more evident. This is due to the increasing popularity of streaming videos and the move toward virtual worlds and the cloud. Innovative technologies are also making it easier for users to access and share data online.

Telecom companies have long argued that tech companies should contribute to the expensive process of setting up digital infrastructure. However, many tech companies and lawmakers have expressed concern that this could hurt laws protecting “net neutrality” and ultimately degrade equal access to the internet.

The biggest European phone and broadband companies that would benefit from such a plan include Vodafone Group Plc, Orange SA, Telefonica SA, and Deutsche Telekom AG.