November 15, 2023
Often shortened to ‘fair share’ or ‘fair contribution’, numerous organisations and regulators have run studies to establish the viability of a fair usage type of fee being imposed on content application providers (CAPs, e.g., Netflix, Amazon Prime, and Microsoft), also called Big Tech, to support low telco margins and high infrastructure costs.
While the European Commission continues to mull over the matter and passing on the decision to the next commission, the Belgian regulator is the latest national regulator to announce their conclusions.
Following a draft proposal in May, the BIPT ran a consultation period during which it received commentary from 22 organisations, which have added to its conclusions on the impact of fair share on consumer welfare and the identification of data traffic.
On the drivers of data traffic, the study concludes that “it is a little too easy to state that Big Tech is causing these data streams”. While admitting that tech giants develop products that can fuel internet demand, ultimately it states that “it is the end-user who pays for the increasing data intensity: fixed subscriptions with higher speeds or mobile subscriptions with more data, cost more.”
It goes on to say that CAPs are already making substantial investments towards the wider infrastructure for instance through data centres and content delivery platforms which are both in the interest of Big Tech and ISPs.
“CAPs and ISPs have a mutual economic dependency due to the importance of both powerful networks and the availability of interesting content. It is in the interest of both an ISP and an Internet service to deliver content as reliably as possible to the end-customer, which entails significant investments for both parties.”
The Belgian regulator also points out the direct contradiction of such fair contribution to the open internet rule, also coined as net neutrality.
It argues that a mandated fee would enable an ISP to alter a CAP’s traffic quality in an attempt to negotiate payments. Similarly, to avoid payments CAPs could remove direct peering or move their servers outside of the EU. These scenarios, the BIPT concludes, would have a direct negative impact on end-users resulting in for instance higher latency.
Fair contribution would also impact smaller and local CAPs, reducing their incentive to grow beyond the contribution limit, give international tech giants a competitive advantage as compared to local companies, and discouraging European companies from investments in data-intensive apps, big data, and cloud-computing.
Other risks cited include, fair share payments falling on the end-consumers and a lack of guarantee that “contributions will effectively trickle down to the public good such as investing in additional coverage or price reductions for consumers”.
Depending on the payment model itself, there could be additional disadvantages for the EC and/or local regulators, including additional costs to create a central fund to host payments and additional resources to monitor potential abuse of termination monopoly or circumvention of net neutrality rules.
The BIPT conclusions strongly resonate those of the German regulator who had commissioned its own study in 2021, with results published early last year. Other national regulators against fair contributions, albeit outside of the European Union (EU), include UK’s Ofcom who also concluded a lack of evidence for fair share.
While we await the EC’s decision on this matter after the new commission is chosen in 2025, it’ll be interesting to see how many other national regulators will follow suit.
Finally, as we’ve stated before, a more comprehensive review of telecom regulations in the EU may be more revealing on ways to foster improved telco margins instead of simply shifting costs to content providers.
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