Every day across Europe, our economy and society are sustained by connectivity. People working from home, accessing public services such as healthcare and education, audio and video streaming, cloud sharing and a host of other online activities that are powering a modern, efficient, inclusive and innovative European society. Data traffic in our internet ecosystem is growing at double digits annually with a small number of large tech platforms accounting for more than 55 percent of the network traffic – to enable the services they are selling.
The cost of meeting this demand is predominantly shouldered by European network providers, who have invested €500 billion, over the past 10 years with the development of their fixed and mobile telecoms networks. Although tech platforms invest in some internet infrastructure, such as submarine cables, these numbers are comparatively small, one-off costs, by comparison. There is also no contribution by these platforms to access network costs that are, by some magnitude, the most investment intensive parts of the network. When we consider that the trend of increasing data usage will continue, as will the need to invest significantly in the underlying infrastructure these digital services rely on to reach audiences, it is clear that more must be done to ensure the long-term sustainability of the internet ecosystem.
Our society is also changing and as we incorporate the virtual world into our daily lives more and more, Europe should count on the world’s leading digital networks to support this innovation for the benefit of all citizens and consumers. Without continued investment, Europe is at risk of falling behind in the global 5G race, which impacts many sectors including manufacturing and healthcare. On the current trajectory, the EU will reach the 60 percent transformational 5G target 10 years after China.
What a fair contribution amounts would be up to the EU and individual member states to negotiate and agree. A report last year by Axon Partners Group Consulting estimates that, taking as a reference an illustrative annual contribution of €20 billion to network costs by tech giants, up to €72 billion could be added to GDP and 840,000 jobs created in 2025. Similarly, it calculates that energy consumption for the sector could be reduced by 28 percent and the carbon footprint would shrink by as much as 94 percent. A subsequent study by Frontier Economics has estimated that traffic driven “over-the-top” (OTT) to end users generates costs for EU telcos of up to €36 million-€40 billion per year.
We wholeheartedly support the recently agreed European Declaration on Digital Rights and Principles for the Digital Decade, which confirms that the European Union and its member states will commit to “developing adequate frameworks so that all market actors benefiting from the digital transformation assume their social responsibilities and make a fair and proportionate contribution to the costs of public goods, services and infrastructures, for the benefit of all Europeans”.
A new EU regulatory framework in this area will ensure that the largest tech platforms that are most responsible for this increased traffic make a fair and proportionate contribution to the development of high quality digital networks in Europe. This intervention should require those platforms to negotiate with network operators to agree a fair and reasonable price for the services provided for the delivery of traffic to end users, and that they make a fair contribution towards the costs and investments in networks for such services. Solutions are achievable, as has been demonstrated in the News Media Bargaining Code (NMBC) in Australia which successfully aimed to address the imbalance in the market between traditional news providers and the same Big Tech companies.
Ultimately, all that network providers want is a level playing field and we believe there is a positive way forward where all players can benefit from a healthy and sustainable internet. A “Fair Share” deal would underpin sustainable investment in Europe’s internet infrastructure, ensuring we are globally competitive and can continue to work from home, communicate effectively and collaborate creatively while preparing for the coming decades and next phase in the growth of the internet including the Metaverse, Web 3.0 and beyond.
Ireland has been at the epicenter of the tech sector for some time and has benefited enormously from foreign direct investment, becoming home to the European headquarters of some of the world’s largest tech companies. Ireland is uniquely positioned when it comes to understanding and shaping the future regulatory and policy landscape for Europe and addressing these structural imbalances in the market. Our digital future may well depend on it.
Liam O’Brien is director of strategy and external affairs at Vodafone Ireland
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