'Google Wouldn't Exist Without Us': Telcos Push Big Techs Into Paying For The Internet

American and European telecommunications companies are at odds. Big Tech businesses have peaked as telecom executives put pressure on regulators to require the digital behemoths to pay a portion of the cost of constructing the internet's backbone.

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Many internet companies, primarily those from the United States, according to European telecoms, have grown their companies on the back of carriers' multi-billion dollar expenditures in internet infrastructure.

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Almost half of all internet traffic is currently generated by Google, Netflix, Meta, Apple, Amazon, and Microsoft. Telcos believe that these companies should pay "fair share" fees to cover their excessive infrastructure needs and contribute to the development of fiber and 5G networks for the future.

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The EU's executive branch, the European Commission, started a consultation last month to look into how to correct the imbalance. On whether to demand a significant contribution from internet firms to the telco operators, officials are soliciting opinions.

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Big Tech companies claim that this would be the equivalent of a "internet tax" and threaten net neutrality.

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What are the largest telcos saying?

During the Mobile World Congress in Barcelona, top telecom executives unleashed a barrage of criticism on the IT industry.

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They lamented the billions spent on building cables and deploying antennas to meet the growing demand for internet access in the absence of matching investments from Big Tech.

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"There is no Netflix or Google without the telcos, without the network," said Michael Trabbia, chief technology and development officer for France's Orange, to Trade Algo. Hence, we are vitally essential since we serve as the gateway to the digital world.

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In a presentation on February 27, Tim Hoettges, CEO of the German telecom company Deutsche Telekom, displayed a rectangle picture to the audience that represented the market value of several players in the sector. American goliaths ruled this map.

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Why couldn't these businesses "at least a little bit" support the initiatives and infrastructure that we are putting in place in Europe, Hoettges questioned the audience.

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A fee for the major companies in technology has appeal, according to BT's Chief Technology Officer Howard Watson.

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"Can we make the operator receive payment from both the client and the content supplier in a two-sided model? Watson said last week on Trade Algo. "I do believe we should investigate that,"

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Watson compared the system to the app shops offered by Google and Apple, which charge developers a percentage of in-app revenues in exchange for their use.

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What has a US tech company said?

Network fee implementation efforts have drawn harsh criticism, not least from tech businesses.

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Netflix Co-CEO Greg Peters called ideas to force tech companies pay internet providers for infrastructure costs a "internet traffic tax" that would have a "adverse effect" on customers when speaking on February 28 at MWC.

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It would be more difficult to create popular series if companies like Netflix, which currently spend a lot on content delivery, were forced to pay for network upgrades, according to Peters.

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Internet companies claim that by asking internet businesses to pay for carriage, carriers are essentially trying to get paid twice. Carriers already accept funds from users through call, text, and data fees to invest in infrastructure, according to tech firms.

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According to Matt Brittin, Google's head of Europe, customers may wind up bearing the costs demanded of digital content platforms, which could "have a negative effect on customers, particularly in the wake of price hikes," in the long run.

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Additionally, tech companies claim that they have already made significant investment in European telco infrastructure, such as server farms and undersea cables.

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Reevaluating "net neutrality"

Some people are worried that the net neutrality principles, which state that the internet ought to be free, open, but not give precedence to any one service, could be compromised as a result of the "fair share" discussion. Telcos maintain that their goal is not to weaken net neutrality.

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Technology companies are concerned that higher infrastructure costs may result in better network access.

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Fair share payments, according to Google's Brittin, "may possibly translate into measures that actually discriminate between various kinds of traffic and infringe on end users' rights."

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One idea is to mandate one-on-one negotiations with the Big Tech companies, akin to the Australian licensing arrangements between news publishers and online platforms.

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"Net neutrality has nothing to do with this. According to Telenor CEO Sigve Brekke, this is not related to network access. He made this statement to Trade Algo. "Cost burden is a factor in this."

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Short-term remedy?

Carriers complain that the heavy production from IT firms is clogging up their networks. To lessen the impact on network traffic, one way is to stagger the delivery of content at various periods.

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To reduce the load on networks, digital content providers may release new blockbuster movies or games at more strategic times or compress the supplied data.

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"We could just start with having a timetable that is obvious as to what is coming when, and also being able to have a conversation about whether businesses are using the most effective manner to carry the traffic, and should certain non-time-critical information be sent at alternative times? ", BT's consumer division CEO Marc Allera told Trade Algo.

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Although a lot of the content is worldwide and what may be busy in one nation at one time might not be as busy in another, I believe that's a nice, relatively easy conversation to have. Nonetheless, I believe that a discussion like this is really simple to have on a local level.

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He said that the idea of net neutrality needs some updating.

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Nothing "binary" about it

The argument over "fair share" has existed forever. Telecom companies have been displeased with the "free riding" on their networks that over-the-top communications and media services like Skype and WhatsApp have done for more than ten years.

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One significant departure from last year's MWC was the presence of a senior EU official.

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The development of cutting-edge mobile networks and future technologies, such as the metaverse, would require enormous investments, according to Thierry Breton, head of domestic market for the European Commission.

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Breton emphasized the significance of maintaining net neutrality and argued against framing the issue as a "binary option" between broadband providers and Big Tech companies.

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According to Paolo Pescatore, a tech, media, and telecom expert at PP Foresight, Breton's attendance at MWC looked to represent the bloc's support for Big Telecom.

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The difficulty with Europe is that there is an imbalance, which makes things less straightforward. "Big Tech, streaming services, and telcos are not to blame for the imbalance. The outdated, outdated regulatory environment is much to blame.

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He claimed that a "perfect mixture that is detrimental to telcos" was formed by a dearth of cross-border consolidation and stagnant telecoms industry profits.

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A framework for carriers to bargain separately with the tech companies who produce the most traffic is a potential landing zone for settlement, according to Ahmad Latif Ali, European telecommunications insights head at IDC, who spoke to Trade Algo. Nonetheless, the situation is hotly argued.

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