Telcos detail plan to charge Big Tech firms for access to Internet users

Telcos detail plan to charge Big Tech firms for access to Internet users
May 2023

European Internet service providers say they should be allowed to demand new fees from online companies that account for over 5 percent of a telco's average peak traffic.

Telecom companies, which have been seeking payments from tech firms for many years, a few months ago convinced the European Union government to seek public input on the controversial plan to make online platforms pay for broadband network upgrades and expansions. The 5 percent figure was pitched to the EU this week in a proposal from the GSM Association, which represents mobile network operators, and the European Telecommunications Network Operators' Association (ETNO).

In a "summary of the joint telecom industry response to the EU consultation," which was provided to Ars by ETNO, the groups wrote:

We propose a clear threshold to ensure that only large traffic generators (LTGs), who impact substantially on operators' networks, fall within the scope. LTGs would only be those companies that account for more than 5% of an operators [sic] yearly average busy hour traffic measured at the individual network level. Other criteria could also be envisaged cumulatively to the 5%, such as the need of meeting the threshold in at least three EU Member States, to reflect the overall impact on European networks.

The GSMA and ETNO proposal claimed that Europe needs "a fair contribution based on a framework that allows balanced negotiations between telcos and large traffic generators who obtain the most benefit from telecom investment, while creating a high-cost burden with their traffic and exerting disproportionate power across markets."

Telcos want direct payments

The GSMA and ETNO seem to want direct payments from tech companies, rather than having tech firms pay into a government-operated fund that would distribute money to ISPs. "A contribution mechanism should be based on commercial negotiations enshrined in a framework that obliges the parties to negotiate, in good faith and based on common EU principles, a fair and reasonable contribution for traffic delivery," the proposal said.

If negotiations break down, a "neutral" third party should "adjudicat[e] the negotiation based on EU guiding principles," the proposal said. The GSMA and ETNO also said the beneficiaries should include "all telecom companies who invest in infrastructure for connectivity--no matter big, small, traditional or challengers."

The GSMA and ETNO plan suggests that tech firms shouldn't be exempt from paying new fees even if they already pay third parties, such as content-delivery networks, to send their traffic. Intermediaries "like commercial content delivery networks (CDNs) should not be considered LTGs, but the traffic conveyed via such intermediaries should count toward the LTG designation threshold," the proposal said.

The telco lobby groups said that setting the threshold at 5 percent would exempt smaller traffic generators "such as public broadcasters, who also have an overarching social obligation to provide content to end users."