Orange Group CEO Christel Heydemann and Brendan Carr, a member of the U.S. Federal Communications Commission (FCC), called on technology giants to contribute a “fair” share to broadband infrastructure costs, arguing such companies are driving a need for continued upgrades and have disproportionately benefitted from telecom investments to date. Their comments, made at an event hosted by the Financial Times this week, come as regulators in the U.S., European Union and South Korea weigh rule changes which would force the likes of Alphabet, Amazon, Meta and Netflix to pay telcos for the large amounts of traffic they generate.
Speaking during a keynote, Heydemann questioned whether the current arrangement between telecoms and tech companies is sustainable, noting internet traffic is growing “30 to 40% annually while telecom revenues are based mostly on flat rates.” She added a majority of traffic – 55% – is now driven by just six companies: Meta, Alphabet, Apple, Amazon, Microsoft and Netflix.
“The traffic driven by large online content platforms is directly responsible for at least 15 billion Euros of cost per year for fixed and mobile networks within the European Union. Those specific costs are not fairly compensated so far,” she said.
Heydemann called on the E.U. to implement a “fairer system” in which large traffic emitters pay fees to operators to help pay for network maintenance and upgrades.
In his own remarks, Carr also backed efforts to make large tech companies “start contributing a fair share” to network costs. “After all, large technology companies benefit tremendously from these high-speed networks, and they generate the lion’s share of network traffic both in Europe and in the U.S.,” he said.
Such calls are not necessarily new. In November 2021, the European Telecommunications Network Operator’s Association urged regulators to “re-balance the relationship between global technology giants” and network operators by requiring such platforms to “contribute fairly to network costs.” Earlier this month, Reuters reported the E.U. is preparing to launch a consultation in Q1 2023 to examine the issue.
Separately, the FCC issued a report in August which highlighted the potential to revamp its Universal Service Fund (USF) program by expanding the contribution base to include edge providers such as streaming services. However, it noted it would need to conduct a rulemaking procedure first to establish its authority to regulate such providers. USF fuels four key connectivity programs in the U.S. and is currently funded by contributions from telecoms.
Meanwhile, officials in South Korea began pushing for new laws which would either restrict or make over-the-top providers like Netflix pay for network use.
But Google and Netflix have pushed back, arguing they have invested in their own infrastructure to ease the burden on telcos. Speaking during a panel session at the Financial Times event, Google’s EMEA president Matt Brittin stated it carries “traffic 99 percent of the way, bringing it closer to users and making it more efficient for our telco parnters,” Ars Technica reported. Similarly, Netflix noted in a statement to Bloomberg it operates "more than 700 caching locations in Europe” to alleviate the need for traffic to flow long distances over telecom networks.
If traffic fees are implemented, Brittin warned, it will be consumers who pay the price either financially or by receiving poorer quality services.