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European telcos seek network investment from big tech and streamers

The EU should make big tech and video streaming companies pay at least part of the estimated €28 billion they’re costing European telecoms giants for their overuse of network infrastructure, according to a new industry report.

A small number of video, social media and tech companies — including Facebook-owners Meta, Netflix and Amazon — account for more than 55 percent of all traffic on mobile and broadband networks, according to a study by the European Telecommunications Network Operators’ Association in Commissioned study conducted by the consulting firm Axon. This costs European telecoms companies between €15 and €28 billion every year.

If some of these data-guzzling tech giants handed over €20 billion to telcos to cover and increase investments in networks, 840,000 new jobs could be created by 2025 and energy consumption in the industry could be significantly reduced, the report said, because this would result in new spending would encourage on 5G and fiber optics.

“We want to start an open dialogue with policymakers, consumers and technology companies on how to address the specific imbalances in internet traffic markets,” said Lise Fuhr, Director General of ETNO.

Telecom companies got caught up in one perennial debate with regulators over whether big tech companies, which consume a significant portion of network data, should pay for some of the costly infrastructure upgrades being carried out by wireless and broadband providers, including the billions being spent on 5G and full fiber rollout.

Executives have pointed to a recent case in South Korea in which a court ordered Netflix to pay late last year for a spike in traffic over SK Broadband’s network prompted by the success of its series Squid Game.

They hope for the sympathy of the EU legislator and refer to a statement by the European Commission as part of its declaration on digital rights that “all market participants benefit from the digital transformation [should] make a fair and proportionate contribution to the costs of public goods, services and infrastructure”.

The most effective way for the Commission to get a contribution from big tech companies would be if they create a mechanism for direct payments to infrastructure projects or to telecoms groups themselves, the report says.

Creating a separate fund for investments or imposing a tax would make the process too complex and difficult to sell to the general public, she argued.

The report describes how European telcos have grown 500 billion over the last decade. The eight largest telcos have a total market capitalization of 240 billion euros, compared to more than 7 trillion euros for the six largest technology groups, she noted.

The chart shows that six major tech companies are responsible for 55% of global network traffic (percent, 2021) for Google, Facebook, Netflix, Apple, Amazon and Microsoft.

Big tech and video streaming companies counter that they also contribute to the cost of network upgrades and that their bundling agreements with telcos help attract and retain customers, creating shared value.

Netflix said: “We are working with European internet service providers to make networks more efficient. For example, we have invested heavily in our own content delivery network called Open Connect.”

They added that the more than 700 so-called “caching” sites they have built across Europe – meaning content is stored locally and does not travel long distances – have reduced traffic on broadband networks, improved user experiences and saved costs .

Amazon declined to comment. Meta did not respond to a request for comment.

Assembly Research analyst Matthew Howett said tech groups are right to point out that they’ve already contributed to content delivery. “The question is therefore whether it is sufficient to meet the requirements for network infrastructure providers.”

Although previous attempts to change the rules in Europe have not been successful, Howett suggested that greater awareness by policymakers of the environmental benefits of network upgrades and of the importance of connectivity during the Covid-19 pandemic paved the way for a other outcome might pave .

European telcos seek network investment from big tech and streamers Source link European telcos seek network investment from big tech and streamers

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