Operator lobbying ramps ahead of European ‘fair contribution’ decision

The European Commission is expected to detail the results of its consultation on whether big content providers should pay for network use.

Characterised as ‘fair contribution’ or ‘fair share’ by supporters of the concept, the essence of the argument is that a disproportionate amount of network traffic is accounted for by the big streaming video providers, such as Netflix and YouTube, so it’s only fair that they chip in for the cost of carrying that traffic. One counterargument is that network owners would have built that capacity anyway so its unfair to punish those that use it.

The European Commission decided to hold a public consultation on the matter, submissions to which closed last May. In its customary fashion, the EC decided to stew on it for a few months but is expected to share the results of that contemplation in the Autumn, which officially starts today. Presumably in anticipation of this, some interested parties have recommenced their own public lobbying, perhaps hoping the EC is still open to influence.

At the start of this week Juan Luis Redondo Maíllo, Director of Digital Public Policy at Telefónica, blogged on the matter, opening by stating “Europe needs €174 billion in order to achieve its Digital Decade targets and secure its digital competitiveness. To fulfil Europe’s economic potential and democratic mandate to achieve these targets, we must focus on shaping the solution.”

He goes on with the usual framing of how strategically and economically important telecoms is and then pre-emptively sets the scene for extraordinary intervention by insisting the gulf between the investment needed and what telcos can afford constitutes a ‘market failure’. To support this claim he points to a study commissioned by Telefónica earlier this year that relies heavily on unintelligible mathematical arcana. Light Reading took up the challenge and wrote this excellent analysis of the matter.

Meanwhile, ETNO (European Telecoms Network Operators Association – ETNOA, surely) is distressed by South Korea being used as a case study of how the imposition of fair contribution laws can go horribly wrong. It collaborated with its South Korean counterpart to publish a joint statement designed to ‘set the record straight on the similarities and differences between the EU and the South Korean markets as well as our views on “fair contribution” and “Sending-Party-Network-Pays” respectively.’

The statement seeks to differentiate the respective debates by characterising them as ‘fair contribution’ in Europe, but ‘preventing network free riding’ in Korea. Once more the distinctions get somewhat arcane, bordering on pedantic, and it’s not obvious what the statement is trying to achieve, other than to warn against the conflation of the two matters. This recent update on the Korea situation from Strand Consult is a more coherent.

We don’t feel any closer to understanding how useful South Korea is as a precedent but we’re also not sure it matters. It seems a fundamental point of principle is at stake here around the concept of producers, as opposed to consumers, being required to pay for the use of telecoms networks. They never have before, so this would mark a major precedent that would presumably have geopolitical consequences.

For all Telefónica’s mathematical gymnastics and ETNO’s special pleading, evidence that streaming video represents an exceptional cost burden on network operators is thin. It’s easier to prove that those telcos lack the cash to develop their networks to the satisfaction of politicians and bureaucrats, but it doesn’t necessarily follow that the difference should be made up by Big Tech. If there is a market failure, surely it’s that telecoms consumers are being charged too little.

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