European telecom groups ask Brussels to make Big Tech pay more for networks

Europe’s biggest telecoms companies have called on the EU to compel Big Tech to pay a “fair” contribution for using their networks, the latest stage in a battle for payments that has pitched the sector against companies such as Netflix and Google.

Technology companies that “benefit most” from telecoms infrastructure and drive traffic growth should contribute more to costs, according to the chief executives of 20 groups including BT, Deutsche Telekom and Telefónica, who signed an open letter seen by the Financial Times. It will be sent to the European Commission and members of the European parliament.

“Future investments are under serious pressure and regulatory action is needed to secure them,” they warned. “A fair and proportionate contribution from the largest traffic generators towards the costs of network infrastructure should form the basis of a new approach.”

They added that regulators need to take action to help secure future investment, with telecoms groups having to spend billions to support the rollout of 5G and upgrade to full-fibre networks.

Signatories included Timotheus Höttges at Deutsche Telekom, Christel Heydemann at Orange, José María Álvarez-Pallete at Telefónica and Pietro Labriola at Telecom Italia. It was also supported by outgoing BT chief executive Philip Jansen, his successor Allison Kirkby, who is currently chief executive at Telia, as well as Vodafone’s chief executive Margherita Della Valle.

They suggested that a payment mechanism might only make demands on “the very largest traffic generators” with a focus on “accountability and transparency on contributions . . . so that operators invest directly into Europe’s digital infrastructure”.

The so-called fair share initiative has been picking up support in Brussels, with the European parliament in June “call[ing] for the establishment of a policy framework where large traffic generators contribute fairly to the adequate funding of telecom networks without prejudice to net neutrality”.

The commission has said perhaps €200bn of additional investment is required to meet its connectivity targets of 5G in all populated areas and full gigabit coverage across the EU by 2030. The commission opened a consultation in February but the expectation of results by June has been delayed.

According to the letter’s signatories, data traffic has increased by an average of 20 per cent to 30 per cent each year — primarily driven by a “handful” of large technology companies. Telecoms groups expect this growth to continue but said it was unlikely to result in a corresponding return on investment under current conditions.

The letter’s signatories claimed that Big Tech companies pay “almost nothing for data transport in our networks” while some cloud providers charge customers “up to 80 times as much for the onward transport of data from the cloud”.

Tech groups have previously opposed fair share proposals and argued they already invest in internet infrastructure including subsea cables and data centres as well as content and services.

Daniel Friedlaender, head of CCIA Europe, which lobbies on behalf of the tech industry, argued telecom groups “have grown thanks to exciting content and services developed by creative and tech firms”.

“Now they’re trying to fool Europe into providing them with extra cash. Telcos want to get their networks fully subsidised by the same firms who have helped them grow and thrive,” he said. “Ultimately, these telecom giants want to make European consumers pay a second time through network fees, coming on top of their subscription.” 

The executives’ letter also called for an overhaul of telecoms regulation, with executives asking policymakers to accept “the need for scale to avoid market fragmentation”. 

The industry is waiting for a decision from the commission on a proposed Orange and MasMovil joint venture in Spain, regarded as a test case for regulators’ tolerance of further consolidation across Europe.

A commission spokesperson said that its recent consultation covered the issue of “fair contribution” to network costs. “This is a complex issue and any decision should be made by understanding the underlying facts and figures.”