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February 22, 2023
internet lab

internet lab. – fair share / network fees | 22 Feb 2023

[CONSULTATION RUMOURS – BARCELONA, HERE I COME]

The European Commission’s consultation on the future of telecoms networks is now expected any day, according to reports from EURACTIV’s Luca Bertuzzi and POLITICO’s Mathieu Pollet. “But after so many delays and mixed signals, these speculations only further prove the messiness of the process,” Bertuzzi points out.

Barcelona, here I come: EU Commissioner Thierry Breton is set to boost the 12-week consultation effort at the Mobile World Congress (MWC) in Barcelona, from 27 February till 2 March. “Wait for my speech at Barcelona,” Breton told Foo Yun Chee from Reuters, while expressing his confidence to have the process wrapped-up by the end of 2023. After the consultation, the waiting game will start to find out what the Commission will end-up putting forward, or more interestingly will not put on the table.

Commitment to telcos?: “Announcing the start of the consultation at Barcelona is a strong signal to the telecoms sector of Breton’s backing, a telecoms industry source said,” Foo Yun Chee wrote, observing that this would be Breton’s first appearance at this telco-centric event.

GSMA Ministerial Programme 2023: On 28 February, as part of GSMA’s ‘Ministerial Programme 2023’ at MWC Barcelona, Renate Nikolay, DG CNECT’s Deputy Director-General, will debate the topic of network investment and how to deliver the digital revolution. Among her co-panelists are representatives from GSMA, Deutsche Telekom, Meta and Netflix.

[CONSULTATION RUMOURS – THE LEAK: INITIAL THOUGHTS]

End of January, POLITICO got its hands on a copy of the European Commission’s draft questionnaire on ‘the future of the connectivity sector’. EURACTIV highlights some of the main elements from the questionnaire.

Some initial thoughts on this leak:

Policymakers: “This creates the impression that this is about a balancing of interests between two parties,” German S&D MEP Tiemo Wölken told netzpolitik.org. His concern: “It is regrettable that the majority of critics are now more or less excluded in the consultation by tendentious questions.”

Experts: “It is a mess”, after sharing this first impression on Twitter Internet expert Rudolf van der Berg took the time to take a closer look at the various flaws he initially spotted in a more in-depth blog post. He suggests rebranding a section of the consultation to: “how to tax internet traffic”, observing that: “the questionnaire has a very clear bias in favour of telcos, erroneously assuming that network investment costs are directly related to traffic growth.” van der Berg’s two-cents to the Commission: “Networks and services are not separate worlds, they affect each other. This acknowledgment would help the Commission to make clear whether today’s physical networks can handle tomorrow’s services.”

Internet expert Konstantinos Komaitis, PhD underscores that “the Questionnaire fails to reflect on the significant consumer protection issues that were previously raised by various bodies, especially the BEUC – The European Consumer Organisation.” He considers that the Commission “should have been careful in pointing to these concerns and make them part of its public consultation.”

Civil society: Thomas Lohninger from NGO epicenter.works observed the lack of attention to users in the questionnaire, in an interview given to netzpolitik.org. “This is not a public consultation to learn something and discuss the meaningfulness of possible measures, but only to justify something that has already been decided”.

Big Tech: Christian Borggreen, from the Computer & Communications Industry Association, put out a Twitter thread showing some examples of why this consultation resembles an exercise of ‘policy-led evidence making’.

Academics: Dr. Christophe C., from Bruegel – Improving economic policy, highlights another perspective, pointing out that: “it is really surprising that no one at the Commission wonders whether Breton should recuse himself from leading this file, whereas he still has strong connections with the telecom industry”.

[BRETON’S HELSINKI SPEECH: TOWARDS AN EU SINGLE MARKET FOR TELECOMS?]

On 6 February, EU Commissioner Thierry Breton spoke about the EU’s digital ambitions in Helsinki, Finland. In his speech, Breton referred to the upcoming consultation efforts, highlighting that it would also explore building an EU single market for telecoms. Achieving this requires, according to Breton, “a reflection on encouraging cross-border consolidation, all while preserving fair and necessary competition for the benefit of our consumers.” In doing so, the former Orange executive supports another call from Big Telcos.

The Commissioner argued that: “the current fragmentation in Europe with suboptimised business models based on national markets and high costs for national spectrum licenses is holding back our collective potential compared to other continents.”

Vestager’s perspective: EU Executive Vice-President Margrethe Vestager, also hinted at the creation of an EU single market for telecoms, in talking to Milano Finanza. In that same interview, Vestager noted on the ongoing debate that: “I don’t think the discussion should be about the profitability of telecom companies.”

Shifting to M&A: Dean Bubley wondered if this mergers and acquisitions focussed messaging “might signal a climbdown on the silly Internet traffic tax / unfair share debate.”

The test: EURACTIV considers the EC’ ‘litmus test’ will be its Orange-MasMovil merger decision.

[S&D GROUP ON AN INCLUSIVE DIGITAL EUROPE]

The Socialists and Democrats Group in the European Parliament put out their views on ensuring an inclusive Digital Europe. In their position paper, the political group stresses, among other things, its commitment to the net neutrality principle.

[EVENTS – THE CREATIVE SECTOR’S PERSPECTIVE]

On 9 February, German EPP Group MEP Sabine Verheyen hosted an event in the European Parliament looking at the fair share / network fees debate from the creative sector’s perspective.

MEP Verheyen: She expressed her concerns about network fees endangering neutrality, pointing to unintended consequences for both the creative sector and consumer. “Network fees could reduce investment from the creative sectors, including in the production of diverse cultural content,” she sounded the warning bell. “I am quite surprised to see how we have created a problem that does not exist. We will keep an eye on the network fee issue from a creative and cultural perspective,” MEP Verheyen concluded.

The creative sector: Other panellists who shared their concerns at the event were: Giulia Iop (representing The European VOD Coalition), Heiko Zysk (representing VAUNET), Lukas Wiewiorra (WIK-Consult), Per Strömbäck, Philippe Meistermann (Bundesverbands Digitalpublisher und Zeitungsverleger), and Jorn van Steenis (the Dutch Ministry of Economic Affairs and Climate Policy).

You can only spend a € once: “Any Euro spent on network fees will not be spent on creativity,” cautioned VAUNET. A message that was reiterated by the European VOD Coalition, which warned that “the biggest loser would be the European consumer”.

‘Melodramatic’: van Steenis, who has worked for Vodafone in the past, argued that “melodramatic” telcos are doing “quite okay”, and stressed the need to take an evidence-based approach and to put consumers central.

[STAKEHOLDERS – TELCOS]

Fair share supporters doing the rounds: Telefónica’s CEO José María Alvarez-Pallete met with EU Commissioner Breton on 10 February. Edward Bouygues, Deputy CEO of Bouygues and Bouygues Telecom president, was in Brussels on 8 February, according to EURACTIV to convince MEPs on the need for a fair share / network fees.

Scaremongering: The European Telecommunications Network Operators (ETNO) Association put out a Q&A document accusing the stakeholders on the opposing side of the debate of spreading misrepresentations, false claims, and engaging in scaremongering. Despite numerous experts pointing to the contrary, ETNO continues to claim that net neutrality is not impacted.

No to the end of net neutrality: That is the key message conveyed by the Association des Opérateurs Télécoms Alternatifs – AOTA (AOTA), Association des Services Internet Communautaires (ASIC), Internet Society (ISOC) France,and France-IX, in an op-ed in Le Monde. The organisations notably underline that “telcos also have an interest in quality content,” while highlighting that “all economic studies indicate that investments to increase bandwidths are marginal.”

[STAKEHOLDERS – BIG TECH/CONTENT]

Rebuttal of French ideas: Google commissioned Plum Consulting to examine the November 2022 proposals from the Fédération Française des Télécoms (FFT) “for a fair contribution of large bandwidth users to network financing”. The TL;DR version of their analysis: “The FFT’s proposal is misguided on market scope; on calculation of the levy; on compliance with Net Neutrality; on underlying data collection and analysis; and on legal basis.” Plum observes a clear case of what one could call policy based evidence: “The FFT goes about this process backwards, establishing its financial targets first and then reverse engineering the reasoning to justify them.”

Anything but fair: The fair share is “anything but fair’, for Daniela Beaujean, from VAUNET – the German umbrella organisation for commercial audiovisual media. In a Tagesspiegel op-ed, she observes the telcos’ clever framing, while benefiting from extensive subsidies on the one hand and paying out high dividends for shareholders on the other. However, she cautions that “not every package with a nice bow and an even nicer name is actually a gift.” Beaujean highlights the potential implications for media diversity and consumers, while recalling that content providers do make significant contributions in the Internet infrastructure and in codec optimisation. See VAUNET’s twitter thread.

Anyone in favour?: Maria Teresa Stecher, from the Computer & Communications Industry Association, looks at the question: ‘who is in favour of taxing Internet traffic?’. Spoiler alert: “No one wants network fees, except for big telco CEOs”. Stecher instead observes strong opposition:

“It’s not just tech firms that firmly oppose the idea, on the contrary. Regulators, consumer groups, civil society, alternative telcos, internet exchanges, academia, and media companies all agree: there is no market failure that needs to be addressed, and taxing internet traffic simply is not compatible with net neutrality.”

[STAKEHOLDERS – EXPERTS]

Mythbusting – Part I: Internet expert Rudolf van der Berg debunks the myth of “the unsurmountable cost of OTT’s traffic for Europe”, notably conveyed by Telefónica. He sets the record straight by demonstrating that meeting consumer demand for content “is not putting an insurmountable financial burden on telecom operators”. In his view, the telecom operators advocating for a fair share / network fees are grossly overstating the cost of traffic, seeing that “providing Europeans with fast(er) internet actually doesn’t cost telcos a penny”.

In a reaction to an Irish Times op-ed by Vodafone’s Liam O’Brien, van der Berg recalls how the telco told investors that the costs per GB are falling faster than usage growth, implying declining costs despite traffic growth. “Either it costs too much and costs are rising and Vodafone misleads investors or costs are falling and you are misleading yourself, the Irish people and governments,” van der Berg wrote.

Mythbusting – Part II: Internet expert Konstantinos Komaitis, PhD takes a closer look at another Telefónica contribution, claiming that the “fair share is not a remake, but it is the sequel”.  His assessment: “I find it very interesting that the transformation of the telecommunications industry towards a more technology-oriented, Internet-adapted sector is dependent on the funding that is produced by the technology companies.” Komaitis’ rebuttal of Telefónica’s attempt at a catchy slogan: “it is true that the fair share debate is not a remake; but it is definitely a sequel. And, just like any sequel, it is tired and not very innovative.”

[THE METAVERSE – EC & EP MOVES]

It remains to be seen in how far the fair share / network fees debate flows into the upcoming metaverse discussions, in the meantime a brief overview of how things are moving (or not) at the European Commission and European Parliament.

EC delays: The European Commission pushed back its timeline to present their non-legislative initiative on virtual worlds from 3 May to 31 May.

EP IMCO woes: The European Parliament’s own-initiative report on “virtual worlds” seems to have hit a road bump in the IMCO Committee, as EURACTIV noted recently that the report could not be allocated as political groups were reluctant to spend points on it with bigger files still around the corner. “If no one steps forward at the next coordinators’ meeting, the file will go to the first no-taker, which EURACTIV understands to be S&D, or it will be cancelled altogether,” EURACTIV explained. Despite the lack of a Rapporteur for now, Portuguese Greens/EFA MEP Francisco Guerreiro has already stepped-up as Shadow. In the Culture and Education (CULT) Committee, French Renew MEP Laurence Farreng became Rapporteur on the topic.

EP JURI hearing: The European Parliament’s Legal Affairs (JURI) Committee is expected to hold a hearing on the metaverse, at the request of the S&D Group, in March, according to EURACTIV.

[OPEN INTERNET  REGULATION STUDY]

ICF and WIK-Consult are preparing a study for the European Commission on the implementation of the EU’s Open Internet Regulation (Articles 3-6 of Regulation (EU) 2015/2120). On 30 January, they organised an online workshop to present their findings and gather final feedback from stakeholders, which was opened by DG CNECT’s Stefan Lechler and gathered over 150 participants.

Provisional findings: The consultancies did not identify any aspect of the EU’s Open Internet Regulation or BEREC Guidelines that requires immediate revision. See their presentation.

[INTERNET LAB – PODCASTS] In our most recent internet lab podcast episodes we spoke with:

[BRIEF HIGHLIGHTS]

[MUSICAL CHAIRS]

  • ETNO | Benedict William Gromann joined ETNO from the Brussels office of BREKO, the German broadband association

[UPCOMING EVENTS]

[CATCH-UP ON PAST EVENTS]

Written by Caroline De Cock, LL.M. , Head of Research.

February 22, 2023

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