Summary:

• European telecos want regulators to make US tech giants like Google contribute towards the cost of building internet infrastructure.
• They argue that these companies have benefited from the infrastructure without financial commitment.
• However, there is no clear way to proceed without it being perceived as an internet tax or eroding net neutrality.
• Some telcos have suggested a two-sided model where the customer and the content provider both pay the operator, but this could increase company’s operating costs and lead to extra costs for customers.

European telcos companies are pushing for regulators to force gig tech companies in the US like Google to pay part of the cost for building internet infrastructure. These includes everything –hardware and software– used to interconnect computers and users on the Internet.

They argue that these tech firms have benefitted greatly from the infrastructure that they built, without making financial commitments. According to the most recent data on internet usage, about half of the world’s online traffic is generated by just Google, Netflix, Meta, Apple, Amazon, and Microsoft.

The disgruntled telecos want big tech to fund the next generation of internet infrastructure which will see 5G and fiber networks become more widespread. However, it is not yet clear the best way to proceed without it seeming like they are forcing tech companies to pay internet tax.

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“Without the telcos, without the network, there is no Netflix, there is no Google. So we are absolutely vital, we are the entry point to the digital world,” Michael Trabbia, chief technology and innovation officer for Orange, had said in an interview with CNBC.

Trabbia is not alone as Tim Hoettges of Deutsche Telekom also showed concern for how uneven the market capitalization is between US tech giants and other telcos. Howard Watson, chief technology officer of BT, even suggested an outright fee like what Google and Apple charge developers for using their application stores.

“Can we get a two-sided model to work, where the customer pays the operator, but also the content provider pays the operator?,” he said.

However, the big tech companies are not just lying down. Netflix, for example, argued that charging them could increase their operating cost as they already spend much on developing their services. Also, it could mean that customers will have to bear extra costs when they already pay for data subscriptions to telecos and other service subscriptions.

There is also the issue of eroding net neutrality, which says that the internet should be free, open, and not give priority to any one service. If one tech firm pay more for infrastructure than the other, it could be favoured with better network access.

For now, nothing is being decided but their are many leaning in favour of individual telcos sitting down with tech firms and coming to an agreement on investments they require.

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