EU Debate Over OTT Fees for Network Usage Heats Up

The idea that content providers should pay for use of telco networks is becoming a hot topic in Europe, stakeholders said. Major network operators unveiled a report in May suggesting that making over-the-top providers pay for use of the networks could bring socioeconomic benefits. EU regulators tentatively found no need for such compensation. The European Commission said it's in discussions with stakeholders on the "complex issue." The internet community fought back Thursday with its own analysis.

A small number of OTTs now generate over 55% of all network traffic but make little to no economic contribution to the development of national telecom networks, the May European Telecommunications Networks Operators Association (ETNO) report said. Operators have invested over 500 billion euros ($484.50 billion) over the past 10 years in developing their fixed and mobile networks in Europe, but they're "in no position to negotiate fair commercial terms for their networks' ever-increasing use by the leading OTTs." The situation is undermining many mobile network operators' ability to achieve a viable return on investment and, if allowed to continue, could "threaten some of the European Commission's 'Digital Decade' connectivity targets."

The report suggested OTTs could contribute to network costs based on a regulated mechanism for direct agreements with MNOs. Such a tool could be limited to just a few very large OTTs, in line with the EU approach for regulation of "gatekeepers" under the Digital Markets Act (DMA) and "very large online platforms" under the Digital Services Act (DSA).

European telecom regulators responded to ETNO in an Oct. 11 preliminary assessment. The Body of European Regulators for Electronic Communications found "no evidence that such mechanism is justified given the current state of the market," and said the proposal could present risks for the internet ecosystem. ETNO panned BEREC's paper for failing to "bring new data to the table." The GSM Association accused BEREC of failing "to provide a pathway for Europe to realistically meet its agreed Digital Decade targets."

The European Commission noted the BEREC study . "We understand that this is based on data from existing studies and that it builds upon previous reports" (2012 and 2017), a spokesperson emailed. The report focused on only direct relations between internet providers and content providers, and one particular approach (sender party pays). The EU Digital Decade Policy Program sets out Europe's objectives on digital connectivity for all, and it agreed all market actors that benefit from the digital transformation "should assume their social responsibilities and make a fair and proportionate contribution to the public goods, services and infrastructures, for the benefit of all citizens in the Union," he said.

Due to the topic's complexity, and the profound technological and business changes in digital markets, the EC encourages more in-depth analysis, data collection and discussions among all interested parties, the EC said. It will launch a "broad consultation" in coming months and is already engaged in dialogue with stakeholders. This debate won't reopen EU net neutrality rules, the spokesperson said.

Internet providers countered telcos' claims Thursday at a Computer & Communications Industry Association and DOT Europe briefing where they presented a report on the impact of tech companies' network investment on the economics of broadband ISPs. Its key findings were that content and application providers continue to invest a great deal on infrastructure, and ISP costs remain broadly stable even as traffic increases. Moreover, calls for network usage fees focus on ISP costs and returns when policymakers should instead consider the impact more holistically -- looking at incentives, competition and investments in content provider and ISP markets, plus user experience -- said Analysys Mason consultant David Abecassis.

The demand for data is coming from telcos' own customers, who have already paid for it, said CCIA Europe Head Christian Borggreen. Introducing network usage fees would mean higher costs for users of such things as cloud services and streaming. Telecom companies asked for such fees in 2012 and everyone opposed it, he said. It's coming up again in the context of the DSA/DMA, the U.S. review of the USF and legal developments in South Korea, which has such fees and whose system is widely regarded as a failure, Borggreen said.