According to telecommunications groups, European authorities should consider developing a legal framework for technology companies to pay a fee when sending data over their networks. This money will be used to upgrade their infrastructure.
They believe that platforms like Amazon and Netflix are consuming a huge amount of data, so they have to bear part of the cost to increase transmission capacity.
“Simply put, telecom companies want to be paid a fee when they have to receive more and more traffic from platforms” said Paolo Pescatore, analyst from PP Foresight.
This idea is supported by countries such as France, Italy and Spain. Therefore, the European Commission (EU) has prepared to hold a seminar to discuss the proposal to require technology companies to pay airtime fees next year.
Tech giants don’t think they need to pay for using a network connection. Photo: Getty Images
“Use the network but don’t pay”
This is not a new problem, CNBC said. For at least the last decade, telecom companies have found ways to force Big Tech to bear part of the cost of infrastructure upgrades. Service providers have long been wary of falling revenue due to the growth of free calling apps like WhatsApp and Skype. They say these apps “use the net without paying”.
In 2012, the European Association of Telecommunications Operators called for a solution to the problem. However, regulators have rejected the proposal, arguing that this could “cause significant harm” to the Internet ecosystem.
It was not until after the pandemic that officials in the EU really worried that the network might be overwhelmed because a large number of Internet users had to work from home, watch movies and play. In response to this, Netflix and Disney+ said they have optimized network usage by reducing video quality.
In May 2022, Ms. Margrethe Vestager, Commissioner of the European Union Competition Commission shared that she would consider asking Big Tech to pay for the use of the network. “They take up too much traffic for their business but don’t contribute to building infrastructure” she added.
According to a report by ETNO, in 2021, big players like Meta, Alphabet, Apple, Amazon, Microsoft account for more than 56% of the total global traffic.
According to CNBC, carriers are investing around 50 billion euros ($48.5 billion) a year in infrastructure to support 5G and next-generation networks. The carriers all agree that the US technology “giants” should have a “fair contribution when using the services of European carriers”.
Not only in Europe, in Korea, companies are also forcing Youtube and Netflix to pay to access the network. SK Broadband even sued Netflix overpaying for network access in connection with the launch of “Squid Game”.
Giants like Meta, Alphabet, Apple, Amazon, Microsoft account for more than 56% of the total global traffic. Photo: Getty Images
According to market research by Omdia, total revenue from mobile and landline services could grow 14% to EUR 1.2 trillion in the next five years. However, the average monthly revenue of telecommunications services per user is forecast to decline by 4%.
Besides, the share prices of telecommunications companies in Europe also fell sharply compared to the previous year. According to Eikon, shares of telecommunications company Stoxx Europe 600 have fallen more than 30% in the past five years, while the Nasdaq 100 has gained more than 70%. According to CNBC, facing this situation, Internet service providers began to find ways to make more profits.
Mr. Pescatore blamed high-format video services such as 4K and 8K or the strong growth of short-video apps like TikTok as the cause of the spike in network traffic. “Telecom companies don’t have any extra revenue for providing access, whether it’s 4G or 5G” he added.
Meanwhile, the emerging field of virtual worlds requires a huge amount of data to operate a vast virtual universe. Analyst Dexter Thillien believes that Internet traffic will surpass what people imagine if this market is formed.
What does Big Tech say?
According to CNBC, technology companies say they don’t need to pay fees just for transmitting data to users. Google and Netflix say that telecom customers have to pay for calls, text messages and mobile data to invest in infrastructure.
In addition, many technology “giants” claim that they have invested billions in Internet infrastructure in Europe. According to data from Analysys Mason, between 2011 and 2012, they invested EUR 183 billion in undersea fiber optic cables, distribution networks and data centers. Netflix has also provided telecom companies with thousands of free servers to store data and reduce bandwidth.
Netflix representative shared: “We have built more than 700 servers in Europe to serve users using our service. This reduces network traffic, saves costs, and helps users get the best experience.”
The Computer and Communications Industry Association said that such claims are “based on the misconception that underinvestment is due to services in need of better network quality and faster speeds”.
Furthermore, if platforms are charged for using the network, they will most likely pass this extra cost on to users. “This will have a negative impact on customers, especially at a time of high inflation” said Matt Brittin, President of Google Europe.
Reference: CNBC
Source: Vietnam Insider