European telecoms are urging Big Tech firms to pay their fair share of soaring data costs across the continent, but few believe they’ll get what they want.
The open letter claims “video streaming, gaming and social media originated by a few digital content platforms accounts for over 70%” of network traffic.
The European telecoms chiefs claimed these companies and have created an uneasy tech landscape in Europe. They lamented that it was unfair that the telcom companies should carry the brunt of these costs.
“With large digital content platforms continually pushing for higher quality streaming the step-change in data traffic we’re experiencing will increase consistently without limits,” the telecom chiefs said in the letter. “If we don’t fix this unbalanced situation [in] Europe will fall behind other world regions, ultimately degrading the quality of experience for all consumers.”
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
Are telecoms fighting a losing battle?
While the European telecoms may be hopeful, many market watchers believe the big bosses will struggle to convincing the tech titans to help cover the data costs.
“This debate has been going around in circles for a decade or more,” Emma Mohr-McClune, service director of global consumer services, platforms and devices for research firm GlobalData, tells Verdict.
“I’m not sure anyone truly believes European carriers will be successful in getting Big Tech players to pay some sort of OTT traffic tax. Such a proposal would create a dangerous precedent for digital service providers everywhere, and would be met with a mighty legal defence.”
Laura Petrone, thematic analyst at GlobalData, tells Verdict that European telecoms view internet and data infrastructures as a public good, arguing that this means costs should be shouldered equally among benefitting companies.
It appears that the EU Commission is gearing up to launch a consultation into whether tech firms should share in the costs.
However, Petrone warns that openly moving against US-based tech giants on behalf of European firms could send political shockwaves across the pond.
“There is a risk of such initiative to be perceived as digital protectionism, potentially straining relationships with the US,” Petrone warns.
“Brussels needs to be careful in feeding this perception at a time when its new regulation, the Digital Markets Act Digital Services Act, is already viewed as targeting US big tech companies.”
What do the tech companies say?
The six Big Tech companies mentioned in the telcos’ open letter stayed mum when Verdict reached out about the news.
Google sent comments Matt Brittin, the search engine giant’s president for EME, made at theFT Tech and Politics Forum, 2022.“We want to continue to deliver great services to European users, and we want to continue to work with European telecom providers to help all internet users and businesses benefit from the open internet,” Brittin said, adding that he hoped “the European Commission and others will continue to support open networks into the future.”
GlobalData is the parent company of Verdict and its sister publications.