In recent weeks, a row between Big Tech and European telecoms operators has begun over who should be responsible for funding the rollout of 5G and broadband. It is a clash that drew in the European Union, who have so far taken a neutral position.
Referencing a 12-week consultation recently launched by the European Commission, EU industry chief Thierry Breton signalled that the bloc is taking an open-minded approach to the issue of ‘fair share’ and who picks up the tab for 5G and broadband network rollout in the future.
Dismissing the idea that Big Tech and European telecoms operators are engaged in a battle, Breton emphasised the need for fair distribution of costs and that the priority must be EU citizens and businesses acquiring access to fast, reliable and data-intense Gigabit connectivity by 2030.
Is the EU Taking the Right Approach?
There can be little doubt that the EU is in a difficult position. Given the power of the FAMGA companies (Facebook, Amazon, Microsoft, Google, and Apple) and the need to balance the provision of consumer choice and a competitive mobile network operator market, the EU is faced with a delicate balancing act.
As such, the impartial stance the EU is taking is understandable. To side with one of the two factions could inflame the dispute to such an extent that it derails the 2030 objective.
Breton said as much when he pointed out that regulatory frameworks were initially devised based on replacing legacy technologies and forcing incumbents to abandon copper networks. However, today’s challenges are quite different. Rather than simply upgrading tech, the conversation has moved to how the EU single market’s potential can be fully optimised.
However, critics of an equal financing model warn that what they refer to as ‘traffic tax’ could result in content-driven platforms routing their services through ISPs that sit outside of the EU.
In what risks becomes a conflict that overshadows overarching goals, it is becoming increasingly clear that if progress is to be made, regulation is needed that is able to adapt to changing times in much the same way industry continues to.
A Failure of the Mobile Operators
Amidst the clash between Big Tech and European telecoms operators is the damning indictment of the latter’s ability to be perceived, at least in the advanced economies, as being anything more than a data pipe provider. Moreover, a data pipe that only gets faster every decade with little change in price for the consumer.
It’s an issue recently raised by Orange CEO Christel Heydemann at 2023’s Mobile World Congress in Barcelona. Heydemann highlighted the crisis experienced by Europe’s mobile operators, who are facing contradictory pressures to meet increasing traffic, mostly from large digital players, while keeping prices low and slashing costs.
Pointing to a PwC study claiming that 46% of telecoms CEOs believe their companies won’t last another decade, she noted that this grim outlook was owed to the difficulty in monetising the almost €600 billion in network investments made in just the last decade.
So that mobile operators may come to be seen as more than just a data pipe that’s upgraded every ten years, Heydemann stressed the need for ‘fair play rules’ to account for the fact that five of the largest online traffic generators account for over half (55%) of daily traffic on telco networks.
Where Do We Go From Here?
Unfortunately, while Big Tech and European telecoms operators remain at loggerheads, it’s hard to see a way out of the impasse.
Perhaps the only way the deadlock can be broken is with the EU implementing regulation that resolves the matter once and for all. However, that, too, comes with risk.
In the absence of EU intervention, the last resort may have to be good, old-fashioned diplomacy. With so much at stake, neither the industry, the EU, nor consumers can afford a dispute over money to prevent the promise of a hyper-connected Europe.