EU seeks input on making tech companies pay for ISPs' network upgrades

The European Union government is seeking public input on a controversial proposal to make online platforms pay for telecom companies' broadband network upgrades and expansions. If it goes forward, tech companies like Google and Netflix and possibly many others could have to make payments toward the financing of broadband network deployment.

The European Commission's exploratory consultation released today said there "seems to be a paradox between increasing volumes of data on the infrastructures and alleged decreasing returns and appetite to invest in network infrastructure." Large telecom companies have been seeking payments from web companies, the consultation notes:

Some electronic communications operators, notably the incumbents, call for the need to establish rules to oblige those content and application providers ("CAPs") or digital players in general who generate enormous volumes of traffic to contribute to the electronic communications network deployment costs. In their view, such contribution would be "fair" as those CAPs and digital players would take advantage of the high-quality networks but would not bear the cost of their roll-out.

The tech companies that would have to start paying "argue that any payments for accessing networks to deliver content or for the amount of traffic transmitted would not only be unjustified, as the traffic is requested by end-users and costs are not necessarily traffic-sensitive (notably in fixed networks), but would also endanger the way the Internet works and likely breach net neutrality rules," the document notes.

Meanwhile, "other stakeholders caution against rushed regulatory intervention," the EC said. The consultation is seeking public input for 12 weeks. The questionnaire asks whether there should be "a mandatory mechanism of direct payments from [tech companies] to contribute to finance network deployment," and if so, whether the fees should be charged to all online content providers or only the largest traffic generators.

Telcos: Big Tech should "contribute fairly to network costs"

The EC isn't only seeking opinions. It wants data from providers on network-upgrade costs, the prices paid for network peering and transit services, and more figures.

"[T]he exploratory consultation is part of an open dialogue with all stakeholders about the potential need for all players benefitting from the digital transformation to fairly contribute to the investments in connectivity infrastructure. This is a complex issue which requires a comprehensive analysis of the underlying facts and figures, before deciding on the need for further action. The Commission is strongly committed to protecting a neutral and open Internet," the EC said.

Forcing tech companies to make new payments would achieve a longtime goal for the telco industry. As Reuters wrote today, companies such as Deutsche Telekom, Orange, Telefonica, and Telecom Italia "have lobbied for leading technology companies to contribute" to network costs for "more than two decades."

A letter from the CEOs of 13 large European telecom companies in 2021 said that network investment "can only be sustainable if such big tech platforms also contribute fairly to network costs." In the US, a Republican member of the Federal Communications Commission argues that Big Tech gets a "free ride" on networks built by ISPs.

But websites and other online service providers already pay for their own Internet access and, in some cases, have built extensive network infrastructure to carry Internet traffic part of the way to broadband users. Web companies that generate the content requested by Internet users also pay fees to Internet transit providers and content delivery network operators.