Deutsche, Vodafone, others want US tech giants to help fund network costs

INFRASTRUCTURE:
The CEOs of 13 European firms urged big tech to chip in to cover network costs, while criticizing EU governments for high spectrum auctions

US tech giants should bear some of the costs of developing Europe’s telecoms networks because they use them so heavily, chief executives of Deutsche Telekom AG, Vodafone Group PLC and 11 other major European telecoms said yesterday.

The call by the CEOs comes as the telecoms industry faces massive investments for 5G, fiber and cable networks to cope with data and cloud services provided by Netflix Inc and Google’s YouTube and Facebook Inc.

Investments in Europe’s telecom sector rose to 52.5 billion euros (US$59.4 billion) last year, a six-year high.

Photo: Bloomberg

“A large and increasing part of network traffic is generated and monetized by big tech platforms, but it requires continuous, intensive network investment and planning by the telecommunications sector,” the CEOs said in a joint statement seen by Reuters.

“This model — which enables EU citizens to enjoy the fruits of the digital transformation — can only be sustainable if such big tech platforms also contribute fairly to network costs,” they said.

The CEOs did not mention any tech firms by name, but Reuters understands that US-listed giants, such as Netflix and Facebook, are companies they have in mind.

Signatories to the letter include the CEOs of Telefonica SA, Orange SA, KPN NV, BT Group PLC, Telekom Austria, Vivacom, Proximus SA, Telenor ASA, Altice Portugal SA, Telia Co and Swisscom AG.

The CEOs also criticized high spectrum prices and auctions, used by EU governments as cash cows, saying that these artificially force unsustainable entrants into the market.

EU lawmakers’ attempts to scrap surcharges on intra-EU calls also got short shrift from the CEOs who see this sector as a source of revenue from business users.

“We estimate that they would forcibly remove over 2 billion euros revenues from the sector in a four-year period, which is equivalent to 2.5 percent of the sector’s yearly investment capacity for mobile infrastructure,” the companies said.

EU lawmakers have to discuss their proposal with EU countries before it can be adopted and may struggle to find agreement.