A global debate
The debate on the fair share contribution by large content platforms started in Asia and spread to the United States and Europe, but Internet market conditions have changed around the world. The bargaining power of large content providers has expanded, making it impossible to negotiate a balanced price for the services provided between companies in the Internet value chain. Different regions are trying to address this market failure, an essential step to ensure the provision of the necessary digital connectivity in the future and the sustainability of participants in the digital ecosystem.
At Telefónica, together with the European telecommunications sector, we are calling for the right conditions to be created to allow fair negotiations between operators and large data traffic generators for the traffic national conveyance service provided by telecoms operators over their networks.
Fair share for network sustainability
A necessary condition to meet EU Digital Decade goals.
- AXON · Europe’s internet ecosystem: socio-economic benefits of a fairer balancePDF | 811 KB
- Frontier Economics. Estimating OTT Traffic-related costs on European Telecommunications NetworksPDF | 636 KB
- NERA Implicaciones de la concentracion del trafico IP en OTT y las posibilidades de su contribucion al desarrollo de redesEspañol | PDF | 2 MB
A wake-up call from the EU telecom sector
We call for a fair and proportionate share aiming for network sustainability as it faces significant investments to upgrade broadband networks and to meet the Digital Compass 2030 targets. However, several challenges threaten the ability of telecom operators to keep pace:
- EU telecom sector financials have been weakening over the last decade, embedded in new competitive dynamics. Only a small number of large digital platforms are responsible for 57% of the Internet traffic, increasing operators’ network costs and lowering margins, as revenues decline. The total network cost incurred to deliver traffic attributable to these large content platforms is estimated at between 36 and 40 billion euros per year in Europe.
- Bargaining power asymmetries are expanding, preventing telecoms to negotiate on a level playing field with digital platforms.
Net neutrality & fair share: a well-matched couple
The proposal is compliant with net neutrality obligations, as Telefónica analyses, and does not offer unequal treatment to data traffic of large content providers. Operators are committed to a truly Open Internet, to an end-to-end digital neutrality, protected by market competition, or enforced where required.
Now is the time to act
The final aim should be to address market failures and to correct unfair imbalances. Specially, when one of the parties, defined as gatekeeper platform in the European Digital Markets Act, enjoys an excessive bargaining power, in an unlevel-playing-field. All market participants should have incentives to invest efficiently to benefit society. Therefore, a legislative solution is required:
- Ensuring that the largest data traffic generators negotiate fair conditions for the traffic conveyance service provided by telecom operators
- Proposing a dispute resolution mechanism managed by a competent authority, whose decision will be binding for both parties, in case that agreements are not reached on commercial terms. An authority with the power to request relevant information on data traffic from all parties.
- Foreseeing a guidance for dispute resolution and an infringement procedure.