Telecom chiefs urge EU lawmakers to pressure tech groups to invest in the internet

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Europe’s biggest telecom providers have called on European lawmakers to force Big Tech groups to contribute more to the cost of expanding internet infrastructure, as streaming and other entertainment services take up an ever-increasing share of the bandwidth.

The chief executives of Deutsche Telekom, Orange, Telefónica and Vodafone have accused the video streaming, gaming and social media groups of relying on billions of euros in investment in internet infrastructure, saying the “burden must be shared in a more proportionate way,” an open letter published in the Financial Times.

“We now urgently call on lawmakers to introduce rules at EU level to make this principle a reality,” says the letter, signed by José María Álvarez-Pallete, President and CEO of Telefónica; Tim Höttges, CEO of Deutsche Telekom; Nick Read, CEO of Vodafone; and Stéphane Richard, outgoing Chairman and CEO of Orange.

Most telecom groups are investing heavily to expand or upgrade services from copper to fiber and on 5G rollout, but have for years struggled with thin margins and falling valuations.

Although carriers have made similar requests to European lawmakers in the past, the companies said they were encouraged by a proposal from the European Commission that “all market players benefit from the digital transformation . . . bring a fair and proportionate contribution to the costs of public goods, services and infrastructure,” a digital rights statement said last month.

“I suspect we’ll see more positions like this, especially during the French Presidency of the Council of the EU given that they’ve been quite critical of Big Tech in the past,” Matthew said. Howett, analyst at Assembly Research.

In their letter, the Chiefs note that video streaming, gaming and social media from a handful of digital platforms account for more than 70% of all network traffic.

Their plea echoes a recent row in South Korea over who should contribute to the maintenance costs incurred by broadband providers – a move that was sparked by the surge in online traffic from the hit Netflix series. squid game. Such was the popularity of the dystopian show that South Korea’s SK Broadband, owned by the country’s largest mobile operator SK Telecom, last year sued Netflix to cover the cost of increased traffic, claiming that he had been forced to upgrade his network.

The quartet warned that retail markets in their industry “are in perpetual decline in terms of profitability”, and warned that “network operators are unable to negotiate fair terms with these giant platforms due to their strong market positions, their asymmetrical bargaining power and the lack of a regulatory level playing field”.

“As a result, we cannot recoup our very large investments, which jeopardizes infrastructure development,” they said. “If we don’t correct this imbalanced situation, Europe will fall behind other regions of the world, which will ultimately degrade the quality of experience for all consumers.”

Video streaming companies have countered that they shouldn’t be singled out for paying more for a network, citing the concept of “net neutrality” – the idea that network providers shouldn’t be allowed to discriminate or charge companies differently based on usage or content.

They also claim that they invest heavily in their own servers to ensure they can deliver content to consumers without clogging the network.

Although Deutsche Telekom’s share price has risen 12% over the past five years, Orange’s has fallen 25%, Telefónica’s has fallen by more than 50% and Vodafone’s by nearly 30 %.

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