Everything you always wanted to know about the “Fair Share” debate, but you were afraid to ask

(UPDATED MAY 2025)

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The debate on “fair share” concerns the question of whether technology companies that provide Internet services through telecommunications networks should contribute to their financing. Telecom operators have repeatedly demanded, since 2012, that the major global platforms such as Google, Meta, Apple, Microsoft and Amazon be required to make this contribution, also in light of the growing Internet traffic connected to their services. Technology companies have always rejected this request, pointing out, inter alia, that it is precisely their services that stimulate and justify investments and the modernization of telephone networks towards fiber and 5G. On the other hand, Internet services themselves require significant investments in data centers, software and content.

In the debate, very polarized positions have emerged: the largest telecommunications operators are in favor of fair share, while technology companies, small telcos, televisions, consumers and the Internet technical community are against it.

The issue of fair share should not be confused with that of the dominance of Internet giants, on which the European Union has already legislated incisively, in particular with the Digital Market Act, the Digital Service Act and the Data Act, recently adopted regulations that are already having their first effects. Likewise, the issue of tax equity and the web tax, which is being addressed on other tables, should be kept separate.

The debate on fair share was strongly relaunched during 2023 by European Commissioner Thierry Breton, who took a very favorable position on the issue. However, this position was not welcomed by the majority of national governments meeting at the Telecom Council in Léon in October 2023. Since that date, it can be said that the dossier has realistically been set aside, although it continues to be mentioned in some official documents, such as the European Commission White Paper, and the reports of Enrico Letta and Mario Draghi.

The outcome of the debate was particularly influenced by the position of BEREC, the European agency of national regulators, which in May 2023 adopted an extremely negative technical opinion on fair share, noting, inter alia, how the measure was fundamentally unjustified and likely to harm investments, competition and net neutrality.

The Fair share models

At the moment, it is possible to consider 3 theoretical models of fair share mandatory contributions:

– the “interconnection” model (a)

– the “universal service contribution” model (b)

– the “regulated peering” model (c)

a) The “interconnection” model

According to this model, the mandatory contribution is the result of the negotiation between the operators that do peering. The Content Provider that delivers its traffic to a telco should pay the latter a termination fee, similar to that applied for traditional packet-switched telephone communications. In the event of disagreement in the negotiation, a judicial recourse to a judge, arbitration court or regulator, is possible.

Most proponents suggest to limit the mechanism to peering negotiations only involving certain content providers, the so-called “large traffic generators” to be designated in various ways.

In the European context, such a mechanism would require a modification of the regulations on interconnection, and in particular of art. 61 of the European Electronic Communications Code. The existence of this European regulatory basis constitutes a sort of European legal reserve on the matter, which in fact precludes the introduction of such legislation at a purely national level, at least until the European provision is modified in a more permissive manner.

This mechanism has never been formally introduced in any legislation and has therefore never found concrete application. However, it has been envisaged in various policy proposals that have never been implemented, including:

– the various proposals on Telefonica’s fair share;

– the White Paper “How to master Europe’s digital infrastructure needs?”

– the Draghi’s Competitiveness Report;

– the Italian amendments to the 2024 Competition Decree.

b) The “universal service contribution” model

This model provides that certain content providers, in particular the so-called “large traffic generators”, must pay a tax whose amount is proportional or depends on the amount of traffic relating to their services in the market in a given period of time. Unlike the “interconnection” model, in this case the mandatory contribution is collected by the State, and not by the telcos. Any use for investments in infrastructure or distribution to telco operators makes this mechanism similar to that of universal service financing.

The question how to measure the traffic and how to attribute it to a certain content provider has never been clarified in details.

This mechanism has never been formally introduced in any legislation and therefore has never found concrete application. However, it has been foreseen in various policy proposals that have never been implemented, including:

– the French proposal of the FTT of November 2022;

– the Polish proposal of the EU Solidarity Fund of May 2023;

– the Amendment to the French Projet de loi de finances of 2025.

c) the “regulated peering” model.

This model consists of fixing the price of peering between operators, thus excluding negotiations between operators, including free settlement. This mechanism is reported to have been applied in South Korea limitedly to telco operators, but it has caused the price of bandwidth to generally increase across the market.     

THE FAIR SHARE DEBATE WITHIN THE EU

Although the debate on “fair share” has been promoted in the European Union, there have never been, at European level, precise rules or proposals that can be considered as a clear European approach on the subject. Even the European Commissioner Thierry Breton, who has been the most convinced supporter of the fair share principle, has never formalized a proposal on the matter. The legislative interventions of the European Union are limited to questions of principle and in no way can they be seen as binding legal bases.

Index:

1. EU legislation, soft legislation and reports           

2. Political interventions by European institutions

3. Position of European Member States (governments and authorities)

4. Legislative proposals or initiative by EU Member States

5. Case-law in the EU 

6. Main positions of stakeholders in the EU

7. Authors

8. Studies

Addendum: the South Korea case

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1.         EU LEGISLATION     

European Declaration on Digital Rights and Principles for the Digital Decade (January 26, 2022). The joined declaration adopted by the European Parliament, Council and Commission solemnly proclaims Digital Rights and Principles for the Digital Decade, with scope of: putting people at the center of digital transformation; protecting fundamental rights online; ensuring an inclusive and sustainable approach; providing a framework for digital rights. The joined declaration contains a generic reference to a solidarity principle amongst market actors which has been advocated by fair share supporters to justify their requests towards OTT and content providers. The claimed reference reads as follows: 

Chapter II: Solidarity and inclusionEveryone should have access to technology that aims at uniting, and not dividing, people. The digital transformation should contribute to a fair society and economy in the Union. We commit to: ………. developing adequate frameworks so that all market actors benefiting from the digital transformation assume their social responsibilities and make a fair and proportionate contribution to the costs of public goods, services and infrastructures, for the benefit of all Europeans.

Being a very generic wording, it is doubtful whether this statement may serve as a solid legal basis for a fair share legislation and, in fact, no concrete initiative was ever taken on the basis of it.

Decision (EU) 2022/2481 of the European Parliament and of the Council of 14 December 2022 establishing the Digital Decade Policy Programme 2030. Following the previous declaration, the Digital Decade Policy Program 2030 aims to Guide EU’s digital transformation towards 2030. In this respect, concrete targets are set in four key areas such as: digital skills; digital infrastructures; business digitalization; digital public services. The decision establishing this program contains a relevant recital (n.13) mirroring the same “solidarity” principle established in the Declaration, according to which: ““[…] All market actors benefiting 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.”

As per the Declaration, the wording of the statement is very generic and therefore it may not serve as a solid legal basis for a fair share legislation.

European public consultation on the future of the electronic communications sector and its infrastructure (February 23, 2023). The consultation was forming part of the so-called “Connectivity Package” and consisted of 62 questions divide by fours chapter. Only one chapter (made of 22 questions) specifically referred to the fair share debate (although also the second chapter contained some reference). The consultation ran until May 19, 2023 and the results were published, after a long wait, only in October 2023. The Commission received 437 responses to the consultation and 164 position papers. 108 contributions were submitted by companies, 87 by business associations, 124 by citizens (114 by EU citizens and 10 by non-EU citizens), 47 by non-governmental organisations (“NGOs”), 16 by research / academic institutions, 14 by consumer organisations and 5 by trade unions. Also national and other public bodies provided feedback. The results of the consultation did not provide a clear support for a prompt fair share legislative proposal. As a consequence, Commissioner Breton appeared to reconsider his initiative and, instead, announced that the Commission was going to work on a strategic White Paper focusing on the sustainability and competitivity of the European telecom market, together with some further legislative proposals to be considered in the future mandate. 

White Paper “How to master Europe’s digital infrastructure needs?” (February 21, 2024). The document intended to be a reflection paper aiming at gathering observations and comments as to the challenges Europe currently faces in the rollout of future connectivity networks. It also presented possible scenarios to attract investments, foster innovation, increase security, and achieve a true Digital Single Market. Such scenarios were not just hypothetical exercises while they represented in fact the exact directions that the European Commission, under the vision of Commissioner Breton, intended to take. Critics have been raised towards the fact that the causal link between reflections and proposed scenarios were not always sufficiently accurate.  The White Paper contains references to potential fair share legislation, although no specific proposal or scenario is clearly formulated. At pag. 26 of the document the following is stated: “On the network side, it is to be recalled that – in contrast to voice traffic (which is billed according to the “calling party’s network pays” principle) – IP interconnection currently appears to rely on transit and peering agreements usually based on a “bill-and-keep” approach where the Internet Service Provider (ISP) does not receive payments at the wholesale level for terminating traffic. According to the model generally attributed to the IP interconnection market, the ISP normally recovers its costs at the retail level by selling internet connectivity to its end-users, who generate internet traffic when retrieving data/content offered by CAPs. For supplementary paid peering and for transit, typically payment is made on the basis of the capacity provided at the point of interconnection. The main recent changes in the overall global architecture of the internet and of interconnection are caused and driven by the expansion of own backbone and delivery infrastructures by the CAPs. This has shifted the relation of interconnection in the form of transit and peering, with “on-net” exchange now predominating, with the CDNs’ dedicated local storage servers (cache servers) collocated directly in the ISPs’ networks. This leads to a very direct and cooperative interaction between CAPs and ISPs as they have to agree on technical and commercial conditions for transit and peering bilaterally (e.g. on the locations of traffic handover, the level of transit prices, on the question of settlement-free or paid peering or on quality and efficiency aspects). There are very few known cases of intervention (by a regulatory authority or by a court) into the contractual relationships between market actors, that generally functions well and so do the markets for transit and peering. There has been nonetheless a vivid debate on this topic. Moreover, it cannot be excluded that the number of cases in the future will increase. Should this be the case, subject to careful assessment, policy measures could be envisaged to ensure swift resolution of disputes. For example, the commercial negotiations and agreements could possibly be further facilitated by providing for a specific timeline and by considering the possibility for requests for dispute resolution mechanisms, in case commercial agreements could not be found within a reasonable period of time. In such case, NRAs or (in cases with a cross-border dimension) BEREC could be solicited, as they have the necessary technical knowledge, and important experience in dispute resolution and in assessing market functioning“.

Enrico Letta “Much more than a market” (April 2024).  Upon request by the Council, Enrico Letta delivered a report on the achievement of a Single market in various sectors, with the aim to: 1. strengthen the European Single Market to address current global challenges; 2. introduce a “fifth freedom” focused on research, innovation, and education; 3. create a Union of Savings and Investments to mobilize private capital; 4. promote integration in key sectors like finance, energy, and telecommunications; 5. Balance competitiveness, strategic autonomy, and fair global conditions; 6. put citizens at the center, ensuring both freedom of movement and the “freedom to stay”.The report emphasizes the need to adapt the Single Market to new global dynamics while promoting solidarity and sustainability. As regards the telecom chapter, the report does not explicitly address the fair share debate and proposed solutions. However, at pag. 58 it is recommended to rethink net neutrality practices.

Mario Draghi “The future of European competitiveness – A competitiveness strategy for Europe”(September 9, 2024).   Upon request of the European Commission, former Italian premier Mario Draghi delivered a report on the competitiveness failures of the European Union’s economic sector. While the telecom market is not the core of the report, a brief chapter dedicated to this sector reflects most of the positions already stated in the White Paper and the Letta’s report. Such acritical alignment of the Draghi report, in particular with the traditional positions of big telecom operators, has been criticised by various authors, according to which the analysis of Draghi on the telecom market should be corrected. Olivier Guersent, the director general of DG COMP, publicly expressed his technical reservations towards the accuracy of the telecom chapter of the Draghi report, particularly with respect to the comparison between the EU and the US telecom markets. His intervention, dated June 27, 2024, can be found on Youtube.  As regards the fair share debate, the Draghi Report makes a specific reference to it at pag. 75 of the Annex B whereby: “…. Encourage the definition of commercial contractual agreements for terminating data traffic and infrastructure cost-sharing between internet service providers or telecom operators owning the infrastructure and very large online platforms (VLOPs) using it. The safeguard of mandatory final arbitration offers made by national competition authorities should be foreseen, in case of failed negotiations within a reasonable period“.  This statement is a clear echo to the hypothesis to rely on the peering market to set-up a compensation mechanism between telcos and OTT, a proposal that – as said before – has been reject by various commentators and in particular by BEREC.

Conclusions of the Council on the White Paper (December 6th, 2024). The Conclusions have been leaded by the Hungarian Presidency (July-December 2024) intending to form a response to the various reflections and proposals contained in the Commission’s White Paper. In general, the Council’s Conclusions are quite critical and skeptical vis-à-vis the position of the Commission, debunking most of its assessment as to the status of the electronic communications market, the need to radically review the current framework and to encourage the consolidation of the telecom sector. The fair share debate is evocated in paragraph 29 of the Conclusions where a potential intervention with respect to the IP interconnection market is principle rejected: “NOTES the proper functioning of the Internet Protocol (IP) interconnection market in the EU and ACKNOWLEDGES the experience of national regulatory authorities in handling dispute resolution matters. In case of future deficiencies of this market, STRESSES the importance of a comprehensive, thorough analysis and impact assessment as foundation for any mitigating initiatives, including a dispute resolution mechanism. Any potential measures should be in line with the open internet principles“. In other words, the Council rejects the idea that the IP interconnection market may be regarded as the right place to solve the investments claims of telcos against OTT, while possible regulatory interventions are deemed possible only on the evidence of a market failure. As a consequence, a prior competition assessment is considered necessary before any legislative proposal, while the consideration about financing of the networks by so-called “(large) traffic generators” is not taken into account.       

2.         POLITICAL INTERVENTIONS BY EUROPEAN INSTITUTIONS
 
Statement by EU commissioner Vestager on the opportunity for the OTTs to bear the network costs of the telcos (May 2, 2022)
The following statement has been reported by Reuters: “Because we see that there are players who generate a lot of traffic that then enables their business but who have not been contributing actually to enable that traffic. They have not been contributing to enabling the investments in the rollout of connectivity ….. and we are in the process of getting a thorough understanding of how could that be enabled “. It is not clear whether Vestager’s initiative was seriously aimed at launching a debate on fair share, or she was just intending to expand the reflections on the state of the telecom sector, while defocusing the attention over merger policy and consolidation.  
 
Intervention by EU Commissioner Breton (May 4, 2022)
Interviewed by Les Echos, Commissioner Breton (former CEO of Orange) relaunched the debate mentioned by Vestager few days earlier.
 
Letter of 54 MEPs to EU Commissioners Vestager and Breton (Juli 12, 2022), and joint reply (October 18, 2022)
A large group of MEPs contested the initiative on fair share, also noting the risks for net neutrality, and called for a public discussion and consultation. Reference is made to alleged negative precedents in US, South Korea and Germany. The reply by Breton and Vestager is generic and makes sure that the net neutrality acquis will not be affected.
 
Statement by EU Commissioner Breton reiterating the close launch of the public consultation (September 14, 2022)
Statement submitted by Linkedin. Starting from the President von der Leyen’s State of the Union letter of intent referring to the Metaverse, Commissioner Breton reiterates the “paradox” of increasing volumes of data being carried on the infrastructures, on one side, and decreasing revenues and appetite to invest to strengthen them and make them resilient, on the other. While calling for a system where “all market players benefiting from the digital transformation make a fair and proportionate contribution to public goods, services and infrastructures, for the benefit of all Europeans“, Breton announced the launch of “a comprehensive reflection and consultation on the vision and business model of the infrastructure that we need to carry the volumes of data and the instant and continuous interactions which will happen in the metaverses“.
 
Letter by 48 MEP supporting the fair share initiative (September 15, 2022), and reply by President Von der Leyen (December 22, 2022)
The original document is not publicly available. Von der Leyen’s reply is reported to generically remind that initiatives should be based on a “solid base of evidence” and that a “consultation will be launched in early 2023“. Interestingly, the following President’s remark is reported: “lncreasing volumes of data on the infrastructures need to be met through adequate returns and appetite to invest, especially for mobile networks“. 
 
Berec’s preliminary assessment about the fair share (October 7, 2022)
BEREC’s document examined proposals for mandatory payments from large OTT to telcos. The preliminary findings were very negative and dismissed most of the founding assumptions of the fair share doctrine. Key findings are the following: 
– No Evidence of Free-Riding: BEREC finds no empirical evidence that CAPs are “free-riding” on ISP infrastructure. Both end-users and CAPs already contribute to the costs of internet connectivity through existing commercial arrangements.
  – Traffic Causation: Internet traffic is primarily generated by end-users who request content from CAPs. Thus, demand is user-driven, and ISPs’ customers already pay for access.
  – Cost Structure: The costs of upgrading network capacity to handle increased traffic volumes are relatively low compared to total network costs. Fixed access networks, in particular, are not highly sensitive to traffic volumes, with costs mainly covered by user subscriptions. Only mobile networks show some degree of traffic-sensitivity.
  – Mutual Interdependence: CAPs and ISPs are mutually dependent: user demand for content drives broadband subscriptions, while broadband availability fuels demand for content. This interdependence underpins the current internet ecosystem.
  – Competitive Market: The IP interconnection market is competitive, and disputes are typically resolved without regulatory intervention. There is no indication that network costs are not already fully covered within the current value chain.
  – Risks of SPNP Model: Implementing the SPNP model could allow ISPs to exploit their termination monopoly, potentially harming the internet ecosystem and risking net neutrality. It could also distort competition, disadvantaging smaller ISPs and CAPs.
  – Need for Justification: Any intervention to mandate payments from CAPs to ISPs requires strong legal and economic justification. BEREC finds the current arguments insufficient to warrant such a change.
BEREC concludes that the proposals for mandatory payments from large OTT to telcos are not justified by current market conditions or cost structures. The internet ecosystem has proven adaptable, and there is no evidence of free-riding. BEREC warns that implementing such payment mechanisms could harm competition, net neutrality, and the broader internet ecosystem.
 
Parliamentary question about net neutrality and new fees for online services (November 22, 2022) 
Parliamentary question P-003784/2022 by German MEP Tiemo Wölken (S&D), with answer by commissioner Breton on 16 December 2022. 
German MEP appears worried, amongst other things, for the impact of a direct contribution mechanism upon net neutrality: “…  how can the internet still pass for neutral if not all online service providers are treated equally?“. Reference is also made to the Berec’s preliminary findings and to the need to enlarge the public debate. 
Breton’s written answer denied that a direct contribution mechanism is already concretely being studied and confirmed that net neutrality had to be respected.
 
Brief of the Research Center of the European Parliament (April 3, 2023)
This is a summary of the fair share debate by the research center, mentioning inter alia the 2023 Sandvine Report referring that six US content providers are considered to generate 48% of global Internet traffic.
 
European Parliament mentioning fair share in Annual Competition Report
A paragraph (n.44) of the report is calling for the establishment of a “policy framework where large traffic generators contribute fairly to the adequate funding of telecom networks”, echoing incumbent’s proposal on the Fair Share. However, an amendment on the paragraph tabled by the S&D group was then adopted, introducing a reference to Net Neutrality. Therefore, the final wording was the following: 
“Is of the opinion that the economic sustainability of telecom networks is essential to achieving the 2030 Digital Compass connectivity targets and high-performance connectivity for all citizens within the EU without jeopardising competition rules; urges the Commission to address and mitigate persistent asymmetries in bargaining power as set out by the European Declaration on Digital Rights and Principles for the Digital Decade; calls for the establishment of a policy framework where large traffic generators contribute fairly to the adequate funding of telecom networks without prejudice to net neutrality”.
The Annual Competition Report is not a legally-binding act but serves the Parliament in providing input/guidance on EU policies. 
 
Post of Commissioner Breton on Linkedin (October 10, 2023) 
Breton published a post with a title “A ‘Digital Networks Act’ to redefine the DNA of our telecoms regulation“. Basically, the commissioner started to abandon the idea of “fair share”, presumably because the results of the European consultation are not consistent, while the vast majority of European governments appears reluctant or even in contrast. Therefore, no legislative proposal could be tabled by the end of the year. Instead, the Commission intended to prepare a White Paper (to be adopted in 1Q2024) to serve as a strategic background for a future, potential reform of the European telecom framework. Such reform, called “Digital Network Act”, should be considered as an option by next European Commission only in 2025. During the Ministerial meeting of Léon (23-24 October, 2023) various Member States doubted about the need to reform the legislative telecom framework, while others asked to be duly involved in future discussions.
Breton also mentioned that the Commission would have convened a round-table with financial investors to discuss how to attract more investments to the sector. 
About the fair share slowdown and the new scenario after Léon see a report from Politico.   
 
BEREC public consultation on its draft Report on IP Interconnection (June 6, 2024). BEREC published its Draft Report and invited stakeholders to submit their feedback and contributions. Among its main conclusions, BEREC determined that the IP-IC ecosystem was still steered by functioning market dynamics and cooperative behaviours of market players, and therefore does not currently necessitate regulatory intervention.
 
Virkkunen’s written responses to MEP questions ahead of the confirmation hearing (September 2024).Candidate Executive Vice-President expressed as following: “There is a growing number of actors in the network economy and a lively debate. This debate should not be simply reduced to discussion on network fees. It should be about how different actors contribute to a vibrant and innovative communication ecosystem, based on a fair level playing field. There have been interesting proposals including the approach suggested in Draghi’s report and in the White Paper on Europe’s digital infrastructure needs. Also, the public consultation that followed the
publication of the White Paper has resulted in a very rich number of contributions, which I will study attentively, and I will engage with all the stakeholders. My guiding principles in making any proposal would be to safeguard the interests of EU citizens and to promote competitiveness and investments“.
During the confirmation’s hearing Commissions designated did not make any reference to fair share. 

3.         POSITIONS OF EUROPEAN MEMBER STATES (governments and authorities)

Presentation by Frode Sorensen, NKOM (May 19, 2022). Intervention at RIPE 84 meeting by Frode Sorensen, chairman of NKOM, the Norwegian regulatory authority. The Norwegian authority rejected the fair share doctrine by recalling how the Internet works: “End-users request the content and pay for the transfer of the content“. According to Sorensen, the fair share is à “déjà vu” bringing back to the ITU debate about SPNP. 

Letter from 7 Member States to the Commission (19 July, 2022). A group of 7 countries (Denmark, Estonia, Finland, Germany, Ireland, Holland, Sweden) suggested a careful approach on the issue of fair sharing and asked for the widest public consultation even before the proposal. The presence of Germany among the signatories is very significant, as it indicates a potential departure from the position of DT (of which the German government is an important shareholder).

Common position by Spain, France and Italy (August 1, 2022). The document (which is not public) supports the fair share proposal. However, it looks that the Italian support for the common position was not adequately discussed and agreed within Italian government, since the Industry Minister (Giorgetti reported by Milano Finanza 4 August 2022) immediately and publicly repudiated the initiative of the Innovation Minister (Colao) who joined the French-Spanish position.

Informal position of German government (November 29, 2022). Following a parliamentary question, the German government took a first, preliminary position on the fair share debate, saying that there is no clear need for such contribution: “The federal government assumes that sufficient financial resources are available for the network expansion in Germany. The main contribution to gigabit expansion in Germany is self-sufficient. According to information from the industry, around 50 billion euros will be available in the coming years for fiber optic expansion alone. In areas where network expansion is not economical, state support measures that are in line with competition come into play.”

Letter from 6 Member States asking for more clarity on the fair share debate (December 5, 2022). Letter reported by Reuters.  Austria, Estonia, Finland, Ireland, the Netherlands and Germany are reported to have written to the Commission requiring more clarity and transparency about the fair share initiative.

Statement by the Dutch government (February 27, 2023) . The Dutch government took a negative approach on the fair share initiative, considering that it will jeopardise the Internet ecosystem. This position was based on the findings of the Oxera study commissioned by the Dutch government. 

Statement by the German government (March 3, 2023). The Secretary of State at the German Federal Ministry (Stefan Schnorr – Bundesministerium für Digitales und Verkehr (BMDV)) made a statement opposing the notion of ‘fair share’ contributions from Big Tech, stating notably that there is no market failure (not in Germany and probably not in the EU), that the South Korean system has threatened media pluralism there, and that the European Commission’s consultation is “quite tendentious”. 

German-Dutch paper referring to ” facts-based analyses” (March 27, 2023). In a joined German-Dutch declaration regarding cooperation in various ambits, the two countries reminded that any initiative on the fair share subject should be based on a “evidence-based” analysis: “Our countries will also further cooperate on the digital economy. In particular, we will work together on EU connectivity to ensure an evidence-based discussion on the issue of network fees, focusing on a clear, fact-based problem definition first before any instruments can be considered. We also call on the Commission to develop secure and open EU cloud certification schemes fit for the international context, without creating trade barriers and considerable adverse impact on European SMEs. Our countries underlined the importance of public values and digitalization, as well as finding solutions to create a safe and inclusive digital society.”

Position of the Austrian government (April 8, 2023). The Austrian government is reported to have taken a negative stand vis-à-vis the fair share initiative. Apparently, the rejection is justified with the fear that OTT could pass the additional costs on to customers through “fair share”, thus making the prices to rise. Risks are also envisaged for net neutrality.

Policy brief by the German Monopolkommission (May 3, 2023). The German Monopolies Commission did not find evidence that OTT providers are placing an excessive burden on the capacities of network operators and legitimizing an additional cost contribution to network expansion.

Non-paper by the Danish government (May 4, 2023). Denmark has commented the Commission’s Public Consultation on the future of the electronic communications sector and its infrastructure. With regard to the “fair share” section, it is stated that: “Denmark is skeptical in principle of measures intended to make large OTTs or other digital players contribute to the cost of the deployment of networks, and strongly opposes any form of mandatory contributions, including taxes or funds based on the traffic that end-users request from CAPs or other digital players. Denmark is of the opinion that the solution to ensuring the necessary investments in roll-out of networks lies in effective competition policy, including the specific regulation in the EECC, along with programs like CEF Digital“. Amen. 

Interview to Belgian regulator  (May 17, 2023). The Belgian telecom regulator publicly excluded that existence of an investment gap in Belgian market.

Preliminary assessment by the Belgian Regulator BIPT (May 26, 2023). The BIPT released its “Draft communication regarding the request to impose mandatory contributions by internet platforms to telecom operators for the use of their networks in Belgium”. Although clarifying that the study “is not a definitive position of BIPT”, the Belgian regulator “believes that today the need for mandatory payments from Internet platforms to network operators is not sufficiently demonstrated in Belgium”. Furthermore, BPIT recognised the symbiotic relationship between ISPs and CAPs and their “mutual economic dependency”.

Dutch Position paper accompanying the consultation response “The future of the electronic communications sector and its infrastructure” (June 2nd, 2023). The Dutch government challenges the fundamental claims of the fair share doctrine.

Majority of EU countries reported to be against a fair share regulatory intervention . According to Reuters, at the 2nd of June TTE Meeting telecoms ministers from 18 EU countries “either rejected the Fair Share proposal or demanded for further assessments to investigate evidence and need of the proposal”. Ministers cited the lack of an analysis of the effects of a network levy, the absence of an investment shortfall, and the risk of detrimental effects on consumers. At the same time, Reuters reports that 10 countries supported Fair Share. Reuters did not disclose the full list of positions. Nonetheless, the configuration of MS positions’ reported is the following:

MS opposing Fair Share: Austria, Belgium, Czech Republic, Denmark, Finland, Germany, Ireland, Lithuania, Malta and The Netherlands

MS supporting Fair Share: France, Greece, Hungary, Spain and Cyprus. Italy was mistakenly mentioned in favour of fair share. 

The position of Poland, Portugal and Romania is less clear, given contrasting opinions reported by Reuters.

Letter by Italian undersecretary to commissioner Breton about fair share (August 4, 2023). Italian undersecretary for the digital policy, Mr. Alessio Butti, wrote to commissioner Breton asking to slow down any legislative initiative on the fair share and instead to make further analyses. The letter was widely motivated and its content was somehow anticipated in a public speech hold at a telecom conference in Italy on June 15, 2023 as well as in an interview for Euractiv published on July 25, 2003. On October 6, 2023 a concise reply letter was sent back by director general Roberto Viola. Both official communications are not public, however leaks may be found on the Internet.

At the Ministerial meeting of Léon (23-24 October, 2023) Italy, which participated through undersecretary Alessio Butti and Industry Minister Adolfo Urso, has been reported to have confirmed a neutral position, while asking for more deeply analyses to be carries out. Nevertheless, after the meeting Minister Urso communicated a note to the press in which he disclosed a more favourable approach to the fair share theory. 

Reply of the French government to a query filed by a member of the Assemblée nationale (September 19, 2023) – The French government seems to approve in principle the idea of a fair share intervention, while noting that there is still no European direction on the subject. It recalls a certain number of points on which France will not be able to compromise: (i) the compatibility of a possible system with the tax framework negotiated at the OECD, for which international commitments have been made; ii) the maintenance of the regulation on the open internet; iii) the maintenance of the contribution of content providers to cultural creation. 

Communication by the BIPT Council on fair share (November 8, 2023) – The Belgian regulator carried-out an analysis regarding the request to impose mandatory contributions by Internet platforms to operators for the use of their networks (fair share) and it concluded that “the need for mandatory payments from Internet platforms to network operators is not sufficiently demonstrated“.

4.         LEGISLATIVE PROPOSALS OR INITIATIVES BY EU MEMBER STATES

Poland’s position on EU solidarity fund (May 16, 2023). The Polish government sent to the Council members a “non-paper on Fair Share” proposing a “new European Solidarity Broadband Fund,” funded by “levies” from content providers that benefit from the rollout of gigabit networks. The news had been anticipated by Politico Pro on May 9, 2023 quoting Polish digital minister Janusz Cieszyński saying: “I think that what we are proposing is sort of middle ground,” opposing a solution that would be a “profit transfer.” The fund could be a “win-win” for everyone, he added. The document is not public. Remarkably, the non-paper was informally withdrawn by the Polish government few weeks later.

Amendment to the French Projet de loi de finances pour 2025, n° 324 (October 13, 2024). A proposal from the French opposition party (RN) envisaged to create an infrastructure fund financed by taxes levied upon the largest traffic generators (12.000 Euro per Gigabyte). The amendment did not pass.

Amendments to the Italian Competition and Taxation decrees (October-December 2024). Various fair share amendments have been tabled, however they have been rejected by the government. 

5.         CASE-LAW IN THE EU 

In the absence of specific legislation on fair share, the issue of a possible contribution by some so-called “users” of telecom networks has been left to negotiations between operators. Since the European IP interconnection market is highly competitive, operators have usually resolved the issue through commercial means.

The IP interconnection takes place normally by peering, which means that two networks exchange traffic directly between each other without going through a third one. Peering can be physically implemented through connecting two networks with a cable/fiber.

Peering agreement can be:

– settlement-free: when there is broad symmetry of the exchange of traffic between networks. In such case, the two operators simply share the costs of the cable/fibre connections; or

– paid peering: operators peer for economic efficiency reasons but the gains are not split evenly due to traffic asymmetry of between the two networks. Networks bargain over peering deals and settlement fees can be part of the bargaining solution.

Although the prevailing practice in the market is settlement-free, there are some exceptions. Some of the largest European telecom operators have sometimes increased peering costs towards smaller ISPs, causing the latter to divert the traffic through transit routes. Few of these confrontations have resulted in legal and antitrust disputes. The very rare legal cases between telcos and content providers, although evoked in the context of the debate on fair share, appear to be mere contractual litigations rather than regulatory disputes.

TIM’s depeering controversy (2012). In 2012, Telecom Italia (now TIM) initiated one of the most significant Italian controversies in the Internet interconnection sector, known as the “TIM depeering case”. The event had a significant impact on the ecosystem of Internet Exchange Points (IXPs) and peering dynamics in Italy. In June 2012, Telecom Italia notified its peers of its decision to abandon all public peering LANs of Italian Internet Exchange Points (such as MIX, NaMeX, TOP-IX), discontinuing public peerings and proposing “paid peering” agreements instead. Telecom Italia stated that it would maintain peerings only with operators considered “peers”, i.e. with balanced traffic volumes and a significant customer base. For all others, peering would have been possible only for a fee, with prices between 3 and 5 euros per Mbps, higher than the market prices of IP transit (2-3 euros per Mbps). From July 2012, disconnections began, causing the disappearance of tens of Gbps of traffic from Italian IXPs. Many operators and content providers suddenly found themselves unable to directly reach TIM customers without purchasing transit or paying for the new peering. Telecom Italia justified the choice as a need to align itself with the practices of other global Tier 1s, to protect its margins on the sale of transport (copper and fiber) and to avoid risks of regulatory intervention, having historically been more open to peering than other European incumbents. Although there was a debate about the legal and competition complaince, no legal disputes arose. More information are here: https://www.linux.it/~md/text/depeering-topix.pdf

Cogent / Orange litigation (2012). The dispute between Cogent Communications (an US ISP) and Orange (France Télécom) involved peering agreements and allegations of anti-competitive practices, becoming a case emblematic of the tensions between network operators and content providers. Cogent and Orange have been disputing for long time peering fees. Cogent, a transit operator transporting inter alia the video traffic from Megaupload, claimed that France Telecom’s intention to charge a fee for opening additional interconnection capacity above a maximum traffic ratio, would “compromise the peering system”. The French antitrust decision obliged Cogent to pay a contribution to Orange, while observing that the peering policies of the latter were not very clear and potentially discriminatory. The case was finally settled by the French court in 2017.

T-Mobile rerouting (2019). In 2019 T-Mobile decided to drastically reduce their capacity at the IXP AMS-IX and rerouted all traffic of fixed and mobile customers via Germany with the result that all players peering at the AMS-IX had to renegotiate their peering agreements with T-Mobile, in order to reach these customers. Smaller players did not do this and therefore could no longer reach T-Mobile’s customers. Internet traffic disruptions skyrocketed and as a result of strong public and business reactions, and considering potential regulatory intervention, T-Mobile gave up and restored the previous connectivity at AMS-IX. 

Litigation Init7/Swisscom in Switzerland (2024). The dispute between Init7, an independent Swiss provider, and Swisscom, the main national operator, concerned peering and in particular the economic conditions of this connection. Init7 contested Swisscom’s request for payments for peering, arguing that, for reasons of competition and network neutrality, the interconnection should be free of charge (zero-settlement peering). After a long litigation started in 2013, on December 19, 2024 the Swiss Communication Commission ComCom issues an order obliging Swisscom to ensure interconnection with Init7 on the basis of zero-regulation peering.

Controversy between Deutsches Forschungsnetz and Deutsche Telekom (2021). During the Corona pandemic, the Deutsches Forschungsnetz (German Research Network: “DFN”) was confronted with increasing data traffic due to increased home-work and overloaded transfer points. Because of congestion, DFN offered direct peering to Deutsche Telekom, which refused. After weighing risks and options, DFN decided to purchase a paid global upstream service from Deutsche Telekom to address connectivity issues. DFN was however able to agree on a fee-free interconnection with other German ISPs. This case has been frequently cited as an example of net neutrality issues and potential abuse of a dominant position by Deutsche Telekom, which allegedly requested payment for a peering service that, according to the prevailing practice between peer operators, should be free or at least cost-neutral. The episode is part of a broader context of criticism directed at Deutsche Telekom for its management of interconnections and for the alleged tendency to subordinate the expansion of peering capacities to payment by other operators, with negative consequences for the quality of service perceived by end users (see also the section “Netzzusammenschaltung im Internet” in the German Wikipedia). 

Decision of Landgericht Cologne (Germany) of May 14, 2024 – Deutsche Telekom vs. Meta . Meta (owner of Facebook) was ordered to pay Deutsche Telekom (DT) about 20 million euros ($21.7 million) for “data transport services,” as per a German court (Cologne) ruled that a contract between the companies must be honored. The court did not consider Meta’s counterclaim that Deutsche Telekom was possibly abusing its market power by charging excessive fees. Meta did not agree with an increase of peering fee decided by DT while continuing to use the telecoms services of thew telecom incumbent. According to the court, Meta should have disconnected from DT and eventually routed  its traffic via transit. Since Meta did not do it, the court considered, as a simple matter of contractual law, that Meta should pay these services a the price indicated by DT. The case has been evocated as a possible justification for a future fair share regulation. However, the fact that the court ruled the case in favor of DT shows that ordinary rules are sufficient to deal with such situations and no special regime is needed. Instead, a “fair share regulation” may be considered necessary only in case peering players are not able to negotiate agreements due to market failures, including significant power unbalances, and litigations cannot help on that. However, this was not the case. Meta argued that the prices asked by Deutsche Telekom were “excessive”, arguing that such prices were far above other paid-for peering relationships or the fees charged by Deutsche Telekom or other network operators for general data transit on the entire Internet. The court dismissed Meta’s arguments, also with respect to a possible abuse of dominant position by Deutsche Telekom. The judges have probably considered the large market position of Meta as well as the fact that its traffic could have been delivered via transit to other carriers and that therefore there was a potential commercial alternative. Meta has been also arguing that peering relationships should be for free. However, while free pering is a very established practice, there is no rule preventing peering parties to charge the counterparts.   The following implementation of the case will tell us more about the significance of this litigation in the current debate about fair share. It would be interesting to see whether Meta and DT will revise their peering policies, and how. 

6.         STAKEHOLDERS’ POSITIONS AND INTERVENTIONS

Since 2022, that is, since the debate on fair share has experienced a new season in Europe, there have been numerous consultations, announcements and statements, both at European and national level, which have allowed to map the positions of the main stakeholders on this issue. It has thus been possible to understand the positions of almost all the subjects operating within the complex digital ecosystem such as: OTTs (including streaming content providers); telecommunications operators and Internet access providers, including Mobile Virtual Network Operators (“MVNOs”); infrastructure operators, understood as pure suppliers of access infrastructures (wholesale-only) and as Tower Companies; information and television broadcasting operators; consumers, the Internet technical community and civil society.

The positions of the stakeholders can be summarized, broadly speaking, as follows:

(a) there is a unanimous position against the establishment of a mandatory contribution by the OTTs. This position of opposition is normally supported by consumers, the technical Internet community and civil society, also on the basis of motivations that evoke the issue of network neutrality;

(b) there is a differentiated position within the telco sector regarding the opening to a mandatory contribution, which can be summarized as follows:

– against a majority in favor of the contribution, a significant part of the telco sector has instead expressed neutrality, perplexity or opposition. Some telcos have also expressed reservations about the appropriateness of the fair share model to resolve the difficulties of the telecom sector and instead stigmatized the downward tariff dynamics;

– among the telcos in favor of the mandatory contribution, there are divergent positions on whether it should be an interconnection fee (which would require a modification of the European and national rules on interconnection) or a contribution to a specialized fund (with a mechanism similar to that of the universal service);

– among the telcos in favor of the mandatory contribution, there is no agreement on the criteria for identifying the beneficiaries, whether they should be purely infrastructure operators or operators that also provide retail services.

(c) the television sector is normally against the establishment of a voluntary contribution, but with some significant exceptions.

Here the main statements and positions on the fair share subject:

Telefonica’s and Netflix’s video on streaming deal (May 24, 2018) – Both CEOs congratulating themselves for a reaching a deal on videostreaming, that must have been successful and profitable for both parties. Ironically, according to the Telefonica’s CEO “this is the beginning of a great friendship“.

First statement of ETNO on the fair contribution issue (November 29, 2021)

Open letter by the CEOs of 4 international telcos on fair share (February 14, 2022). Statement by the CEOs of DT, Telefonica, Orange and Vodafone who complain about the asymmetry of earnings and bargaining power between them and the large OTT companies, in doing so submitting the issues underlying the fair share doctrine. 

Presentation by a Swiss telco rebutting the SPNP model (May 19, 2022). Presentation made at 84 RIPE meeting.   

Declaration by TIM’s CEO Mr. Fabio Labriola regarding the asymmetry with OTT (June 6, 2022). Labriola complains, in addition to the asymmetry with the OTTs, that in Italy there are “too many operators compared to the potential demand” with the consequence that telecom prices are among the lowest in Europe. NB: remarkably, TIM is offering amongst the lowest prices in Italy via its low-cost brand Kena: https://www.veritaeaffari.it/media/nuove-tariffe-tim-contro-operatori-virtuali-18-agosto-2022/

Letter by 34 Civil Society organizations to commissioners Vestager and Breton (June 8, 2022). The various associations challenged the fair share doctrine, in particular the SPNP model,  from a historical and technical point of view, while also pointing out the risks for net neutrality.

Statement by ACT – European Broadcaster Association (July 8, 2022). The commercial broadcaster association disputed the theory of fair sharing with reasons that appear substantially similar to those of the GAFAMs: “ACT members are already investing significantly in content delivery networks, directly or via partners, to ensure a smooth delivery of their content. Furthermore, our sector supports ISPs by allowing Europeans to derive value from the premium broadband connections they purchase from the telecoms companies to watch our content”

Statement of the European Digital SME Alliance (July 8, 2022). The association supports the fair share initiative, however pointing out that such contributions (from big tech or others) should translate into more affordable conditions for SMEs to use the networks which are a key element of a thriving digital ecosystem.

Post of Telefonica’s official blog – Towards pro-investment market structures in the telecom sector (July 12. 2022). Post advocating for more domestic consolidation and less competition.

Joined statement by various national and European telecoms associations in favour of fair share ( July 18, 2022). Joined statement in favor of the fair share initiative made by AOMR (Romania), APMS (Czech), AssoTelecomunicazioni (Italy), ATI (Bulgaria), DigitalES (Spain), ETNO (EU), Fédération Française des Télécoms (France), GSMA Europe (EU) and Internetoffensive Österreich (Austria)

Position paper by MVNO Europe (August 30, 2022). Position paper by MVNO Europe stressing the lack of evidence supporting the fair share doctrine and the risk that such additional resources may be used by big telcos for anticompetitive reasons rather than for investments. 

Statement by ECTA (September 14, 2022). The association, representing alternative telco operators, does not take a precise position vis-à-vis the fair share doctrine, while advocating the need to preserve competition and Open Internet principles in the EU.

Position paper by BEUC (September 19, 2022). The European consumers associations is contrary to the fair share initiative as far as it consists of the ri-proposal of a “sending-party-pays” and it could jeopardise competition and net neutrality.

Statement by 26 telco CEOs at FT-ETNO conference (September 26, 2022). Declaration supporting the fair share initiative signed by various operators such as Swisscom, A1 Telekom Austria, United Group, Bouygues, Proximus, Telenor, Fastweb, KPN, Altice Portugal, Orange Group, Deutsche Telekom, BT, Telia, TIM, Telefónica and Vodafone. 

Statement di GSMA Europe on the Global Network Investment Demands Faced by Mobile Operators (October 3, 2022). The statement says that “All segments of the internet ecosystem should have the opportunity to make fair returns in a competitive marketplace.”

Fair share proposal by FFT (November 4, 2022). The French telco association proposes a SPNP model based on gigabyte tariff at European level, which the national authorities would have the possibility of adapting in order to take account the differences in investments and the particularities of each Member State. Then parties would be obliged to conclude a private law contract including compensation for the costs invested in the networks concerned.

Statement of AOTA against fair share (November 17, 2022). The French association of small telcos disputes the fair share doctrine as it could be detrimental for net neutrality and competition.

Paper by EDRI ed Epicenter against fair share (November 30, 2022). Joined paper by EDRi and Epicenter.works rebutting, with facts and arguments, the traditional positions of the traditional telecom industry regarding the fair share.

Letter by Epicenter and other digital rights associations against SPNP (December 14, 2022). Joined letter of Epicenter and other digital rights association to the European Commission

White paper on fair share by ECO (December 19, 2022). Internet Interconnection and Infrastructure: on the Debate of Infrastructure Cost Sharing

Letter by Euro-IX (January 3, 2023) . The European association of IXP outlights to the Commission the potential risks of the SPNP and fair share models for the Internet ecosystem as well as for the IP interconnection commercial markets. Vestager and Breton sent a reply on March 6, 2023.

Paper by TIM “Fair Share vuol dire Fair Play” (January 13, 2023).. Paper of TIM recalling the traditional arguments pro-fair share. Remarkably, at pag. 4 it is said that “In fact, based on net neutrality regulations, telecommunications operators cannot … ….. refuse to “carry” the traffic volumes generated by one specific subject“. Authors disagree, since net neutrality rules do not imply such obligations.   

AMETIC requests an open dialogue on the Network Tax (February 13, 2023). Spanish digital trade association (AMETIC) has officially published its position paper on network tax and has distributed it to the Spanish media.

Statement by ETNO “What the World Cup meant for broadband networks” (March 13, 2023). Explanation by ETNO about the growth and costs of traffic during World Cup and the rebuttal by Rudolf Van der Berg. 

Telefonica’s blog: South Korea as pioneering model of fair contribution to network financing (March 8, 2023). Telefonica supports the South Korean model, however without explaining why it should be a good practice for the EU and how to address the re-routing practices.

Statement by ETNO about whom should be subject to a network fee (April 3, 2023). According to ETNO, the #faircontribution proposal should only address the five to six companies generating roughly half of the global internet traffic. Other actors such as local cloud providers, broadcasters or local cloud providers & CDNs would not be affected.

Joint statement by Industry, NGO, Consumer, Telecom, MEPs and Rightsholder Joint against Network Fees (May 3, 2023). A very broad coalition of stakeholders has come together to publicly warn against introducing “network fees”. 

Peter van Burgel – Why big telco doesn’t need to be subsidized by big tech (July 13, 2023). The CEO of AMS-IX, the IXP of Amsterdam, rejects the network fees initiative.

ETNO and KTOA statement about network fees in Korea (August 31, 2023). ETNO, the Association representing Europe’s leading telecom operators, and KTOA, the Association representing telecom operators in the Republic of Korea, published a Joint Statement on the internet ecosystem aiming at clarifying similarities and differences between the EU and the South Korean markets as well as their views on “fair contribution” and “Sending-Party-Network-Pays” respectively.

CCIAA’s post debunking the argument of “investment gap” (September 13, 2023)

European telecom groups ask Brussels to make Big Tech pay more for networks (FT, October 2nd). In sight of the Léon ministerial council, the telco supporting the fair share initiative (mainly reunited through the GSMA and ETNO associations) have made a new communication which is reported by Financial Times. See the press release from the GSMA website.

CCIAA and other associations Joint Statement relating to the Commissions’s White Paper (May 16, 2024). The joint statement on “Preliminary Concerns Regarding European Commission’s White Paper on Europe’s Digital Infrastructure Needs” intends to alert about the parts of the Commission’s White Paper which may make revive a fair share rule. Reference is made to the possibility of introducing of the “dispute resolution mechanisms” for the IP interconnection market which, according to CCIAA, in practice could come down to network usage fees through the backdoor. 

Telefonica’s blog (Gonzalo López-Barajas ) – The Digital Networks Act as a solution to the Internet imbalance (October 11, 2024). The author assumes that the patterns of Internet traffic have changed since the Internet foundation and therefore a fair share contribution is needed to compensate traffic imbalances.    

Open letter by Civil Society organizations (October 29, 2024). The letter addressed, to EU Commissioner-designate Henna Virkkunen, expresses opposition to dispute resolution in the interconnection market. The group strongly opposes the dispute resolution mechanism proposed for the interconnection market, as outlined in the EC’s White Paper. This mechanism is viewed as detrimental to end users and the global Internet, as it would likely increase costs, diminish service quality, and distort competition in favour of large telecom operators.

Paper by Vodafone: A framework for Responsible Use of Networks (April 16, 2025). The study highlights the urgent need for a new approach to managing Europe’s digital infrastructure amid surging data demand and an ongoing investment gap. The report frames the issue as a “tragedy of the commons,” where telecom networks are treated as an infinite resource, leading to inefficiencies, waste, and risks of network degradation. Vodafone argues that content providers have little incentive to optimize their services for efficient network use, while network operators face regulatory and economic barriers to expanding and managing capacity. 

7.         AUTHORS

Interview (by Euroactiv) to Innocenzo Genna and Gerard Pogorel (June 6, 2022)

Press article by IlSole/24Ore showing OTT investments in connectivity and submarine cables (June 2,  2022) 

Konstantinos Komaitis  (blog) – Europe’s emotions can become its worst enemy  (July 13, 2022) 

Joined letter by 29 experts and academics against the SPNP model (October 10, 2022) . The reply of the European Commission was sent on January 10, 2023

Maria Teresa Stecher– The Internet Traffic tax: why telcos should tell EU lawmakers what they tell their investors (July 25, 2022)

Telecompaper – Why an ‘internet traffic tax’ doesn’t stand a chance (August 3, 2022) 

Anurag Bhatia (blog) on fair share in India (October 25, 2022)

Venancio Salcines – Fair contribution of big tech to networks: Stopping the free riding (November 8, 2022)

Barbara van Schewick (Stanford University) EU’s Top Telecom Regulator: Big Telecoms’ Proposal to Force Websites to Pay Them Puts the Internet at Risk (November 23, 2022) 

NLNOG 2022 Rudolf van der Berg – Big Telco vs Big Tech, or why telcos want money for traffic again (December 14, 2022)

Innocenzo Genna (RadioBruxellesLibera): Fair share, the definitive guide (January 9, 2023)

Innocenzo Genna (Valigia Blu) – Fair share: come Bruxelles potrebbe riscrivere le regole di Internet (January 14, 2023)

Stefano Quintarelli  – Fair share or fairy tale ? (January 15, 2023) . Author shows how the  potential proceeds of an Internet tax may not be relevant to solve the issues of telcos.

Alexander Havang (Sandvine) – The Yin and Yang of Telecom and Big Tech (April 6, 2023)

Statement by Brendan Carr, Commissioner at the Federal Communications Commission (FCC), interviewed by Euractiv (may 23, 2023). Carr speaks in favour of a model whereby large traffic providers should contribute to the network investments. It looks a personal opionion, not representing current US approach.

Barbara van Schewick – When the Media Gets It Wrong: The EU Parliament Actually Said No to Forcing Websites to Pay ISPs (June 14, 2023)

Iain Morris – Telcos have done a poor job in the ‘fair contribution’ debate (June 27, 2023). The author challenges the fair share arguments based on the increase of traffic and impact on costs.

Carl Gahnberg – Network Usage Fees: The European Commission Plays Politics with the Global Internet (October 19, 2023) – Internet Society’s analysis of the responses to the European consultation, with negative commenta.

Maria Teresa Stecher on DisCo Blog – White Paper On Europe’s Digital Infrastructure Needs: Europe’s Open Internet Still At Risk (April 8th, 2024) . CCIAA considerations about the White Paper,  maintaining that the European Commission “continues to entertain the introduction of internet network usage fees in different semi-hidden ways”.   

Barbara van Schewick – It’s Groundhog Day at the European Commission (June 30, 2024). Stanford law professor Barbara van Schewick responds to the European Commission’s latest telecom proposal white paper which advocates removing competition, forcing applications to pay ISPs, and raising the price of broadband for Europeans, calling Groundhog Day in Europe. “It’s a fevered dream of a mid-level telecom exec who is enamored with buzzwords” but in the end, “It’s the same old, same old, just dressed up in a new costume.”

8.         STUDIES AND RESEARCHES ON FAIR SHARE

Frontier – Estimating ott traffic-related costs on european telecommunications networks (March 2022). Study funded by DT, Orange, Telefonica and Vodafone. Starting from the (controversial) assumption that the Internet is a “two-sided market” allowing telecom operators to charge both users and content providers, the study calculates the costs associated with traffic “sensitive” elements of fixed and mobile telecom networks across Europe, which at the end are annualy quantified in 2- 6 billion for fixed and 13-22 billion for mobile.

Axon – Europe’s internet ecosystem: socio-economic benefits of a fairer balance between tech giants and telecom operators (May 2022). Study funded by ETNO, the incumbents’ telcos lobby. The big telcos ask for a regulatory intervention entitling them to recover from major global OTT the network costs caused by the growth of their Internet traffic. A direct compensation mechanism, somehow impacting on transit and peering markets, and involving a dispute resolution tool, is considered the best option (there is implicit reference to the mechanism provided in Australian Copyright Directive). The study claims that “… most of the data traffic growth over the last decade has been driven by a small number of leading Over-The-Top (OTT) providers, with little or no economic contribution to the development of national telecom networks, who now account for over 55%1 of all network traffic“.

Kearney – The Internet Value Chain 2022 (May 15, 2022). Study commissioned by GSMA Europe, the mobile operators’ lobby. Describing the development of value chain of the Internet market over the last 5 years (2015-2020), the study notes, inter alia, that the share values of telcos have remained essentially flat, while those of OTTs are much more dynamic. Consequently, telcos’ returns on capital have been quite low while, by contrast, some global OTTs have been much more successful. In the digital sector telcos appear to face a process of marginalization, also in the light of new transport virtualization technologies, even in the network segment, where they still continue to keep an essential role only in the transportation/final access up to the user (in practice, they are still strong as ISP rather than telcos).

WIK – Competitive conditions on transit and peering markets. Implications for European digital sovereignty (February 2022, published in May 2022). Study commissioned by Bnetz, the German regulator. The study analyzes the functioning of the peering and interconnection markets in a technical and objective way, providing an indirect debunking of most “fair share” theses claimed by big telcos (especially with the regard to the claim whereby there might be a competition problem in the IP interconnection markets). WIK also acknowledges the marginalization process of telcos in the connectivity sector, in which they are increasingly relegated to the role of ISP (where, however, they control the bottleneck towards the end customer).

Chambers Communications – An internet traffic tax would harm Europe’s digital transformation (July 2022). Study funded by CCIAA, the US lobby of the tech. The study challenges the fair share story-telling and in particular debunks most of AXON’s calculations and assunptions (with respect to data growth; impact on investments; the South Korean case): “The cost estimates cited in the Axon report are flawed as a basis for assessing traffic related costs since they are not based on an assessment of incremental traffic costs. The incremental costs of internet traffic are negligible for fixed broadband access, low and declining for mobile access and low in transit markets where content and application providers invest in network capacity e.g., in subsea fibre optic cables. The predominant IP model is settlement free peering”. The WIK study is often quoted. The paper concludes that there is no sound basis for imposing a network fee on OTT, a measure that would harm rather than promote investment by reducing innovation and use in relation to content and applications; and would harm achievement of the European Commission’s digital transformation vision for 2030.

Analysts Mason – Netflix’s Open Connect program and codec optimisation helped ISPs save over USD1 billion globally in 2021 (July 2022). Study funded by Netflix. The study examines the benefits of Netflix’s Open Connect coding system in the UK and South Korean markets, finding that “the marginal costs of delivering Netflix content represent around 0.5% of total network costs, despite Netflix usage representing about 15% of peak usage in the UK”. The study also clarifies telecom network costs by providing a distinction between sensitive and insensitive costs for OTT traffic which does not correspond to that of AXON and FRONTIER. It should be noted that in South Korea, Netflix is currently engaged in a legal dispute precisely on the fair share subject.

Ecipe – Sender-Pays: Rethinking incentives for infrastructure investments (September 30, 2022). ECIPE’s paper makes the argument that the ETNO proposal is bad for EU industrial policy.

Analysys Mason – IP interconnection on the Internet: a European perspective for 2022 (September 26,  2022). Report funded by AWS, Google and Microsoft. The study challenges the foundation of the fair share thesis, i.e. the idea of a regulated ‘network usage fees’ replacing commercially negotiated Internet interconnection, pointing out, inter alia, that the increase in Internet traffic has a marginal impact on investments in the network, and that Internet companies have made significant investments and innovations to improve the delivery of content on the Internet (including the development of CDNs and public clouds to deliver content and services to the whole range of customers including end-users and businesses of all sizes).

Plum – A symbiotic ecosystem: how Google contributes to the telecom sector (October 3, 2022). Report funded by Google. While challenges the fair share doctrine, the report stresses the symbiotic and complementary relationships within the digital sector.  

Plum – How the Internet works, and is paid for (October 3, 2022). Study funded by Google. The study, challenging the fair share doctrine, explores in detail how the modern Internet actually works to deliver content to end users, with analysis of how data moves around the Internet, how the Internet is coordinated and governed, and the key features of today’s Internet. It also includes analysis of the economics of the Internet and how its infrastructure is paid for.

Analysts Mason – The impact of tech companies’ network investment on the economics of broadband ISPs (October 12, 20229. Report funded by Incompas, a US tech lobby. While describing how Content and Applications Providers have invested significantly to deploy the global network infrastructure of today’s internet (from data centers to submarine fiber ecc), the report examines the implications of mandating that CAPs pay ISPs network usage fees linked to traffic flows between their networks in order to reach ISPs’ end-users, concluding that such a mandate would be harmful to end users and the global internet ecosystem.

François Jeanjean (Orange) – Fair Cost Sharing in Telecommunication Industry, a Virtuous Circle (22 November 2022). Study by an Orange’s economist, stating that when the content provider charges consumers for content, cost sharing triggers a virtuous circle that incentivizes the content provider to reduce its traffic, which lowers prices for the end consumer and thus increases, not only the consumers surplus but also the profits of the ISP as well as those of the content provider. Remarkably the comment by Van der Berg.

Oxera – Proposals for a levy on online content application providers to fund network operators (February 27, 2023). Report commissioned by the Dutch government. The report challenges both direct and indirect network fees proposals (with the former considered more negatively than the latter) and concludes that such a policy cannot robustly be shown to increase economic efficiency, and would potentially bring substantial transaction and set-up costs.

Jullien / Bouvard (TSE) – Fair cost sharing: big tech vs telcos (March 2023). The study describes a cost-sharing mechanism where a content provider contributes to covering the costs incurred by a network operator when delivering content to consumers. The authors believe  that the cost- share should not only boost the content provider’s incentives to moderate traffic but also affect the price composition for consumers buying access and content.

Communications Chambers / Robert Kenny – Securing investment to achieve the Digital Decade infrastructure targets .(March 2023). The study finds amongst others that there is no funding gap for infrastructure as plenty of private and public financing is available.

Baranes / Vuong – Economic contribution to the debate on cost sharing policy (March 16, 2023). Study in favor of the fair share initiative, noting that “because the telecommunication operators have to bear the full costs of delivering content to end-users, their business is strongly affected due to the sharp increase in traffic generation“. On Twitter Komaitis observes that “It is already evident from the abstract only that the authors conveniently fail to engage in considerations of how the Internet actually works“. 

OECD – Working Party on Communication Infrastructure and Services Policy (April 13-14, 2023) . The OECD’s document sounds implicitly hostile to the fair share doctrine, by observing that the Internet ecosystem is complex and may by financed in various ways: “The diversity and hence complexity of the financial landscape around connectivity infrastructure and services has constantly increased. While, for a large part of the 20th century, single entities in OECD countries had a monopoly in infrastructure and services, the liberalisation of markets has not only led to different players with a range of different business models, but also to different levels of infrastructure and service provision. This, in turn, corresponds to multiple different ways to finance communication infrastructure and structure its ownership“. The document is not publicly accessible yet, however it is mentioned in Komaitis’ Linkedin profile.

Augusto Preta /Itmedia Consulting – The fair share doctrine, does it make sense? (April 18, 2023). While observing that there is no clear evidence of an investiment gap for connectivity from now to 2030, the author, an experienced economist, concludes that a regulated “fair” contribution scheme will produce negative effects on the entire ecosystem, with no positive effects, apart from the few Big Telcos who might benefit.  

Analysys Mason – Full-fibre networks in Europe: state of play and future evolution (May 3, 2023). The study, commissioned by Meta, challenges the “telecom crisis” argument and outlines that very fast connections are already available for most Europeans and that the current network investment trend will provide telecom operators with a continuous stream of revenues for the next decades.

WIK – Investment and funding needs for the Digital Decade connectivity targets (July 12, 2023). This study, commissioned by the European Commission, was deemed to simply describe the financial needs to achieve the European connectivity targets. However, its results have been disputed, because according to the Commission the study would have proven a “gap” (meaning a shortfall) of 174 billion in investments in Europe. Contrary to that, it has been ascertained that the 174 billion figure just describes the financial need for investments, without indicating that such financial resources are missing. 

Augusto Preta/Itmedia consulting – L’impatto della network tax sull’ecosistema digitale, i media e i consumatori (September 25, 2023). The author examines the impact of a potential network fees taxation upon the OTT, envisaging negative consequences for innovation and consumers.

Monitor Deloitte – Future of Electronic Communications Networks in Europe (October 9,  2023). The study, commissioned by ETNO, highlights the key technology trends and investment requirements that will drive digital transformation, while reiterating the argument of investment “gap” (called “deficit” in this context).

Stratix – Mind the Gap: Demystification of the so-called ‘connectivity investment gap (December 2023).The report challenges the European Commission’s depiction of a substantial ‘investment gap’ in achieving the Digital Decade policy objectives by 2030. The Commission highlighted an alleged €174 billion shortfall for reaching 1Gbps home connectivity and 5G coverage throughout the EU. According to Stratix the study by WIK Consult, referenced by the Commission, clarifies that the €174 billion represents the total investment required to meet these objectives, with a significant portion expected to come from market forces. The study by WIK Consult identifies potential public funding needs of €40 billion for fixed networks and €2.7 billion for mobile networks. The Stratix report however claims that these figures overstate the investment needed due to discrepancies in European Commission statistics and an oversight of allocated public funding in certain EU nations like France.

ADDENDUM: THE SPNP CASE IN SOUTH KOREA

A SPNP model is in force in South Korea since 2016. The mandatory termination regime only applied amongst telecom operators, however is has resulted into a general increase of the bandwidth cost in the local peering market, also because of the high concentration of the ISP market, with the ultimate consequence that some content providers have abandoned the market or decided to peer abroad (such is the case of Netflix, for instance). There have been diverging opinions about the impact of this model upon the Korean market and consumers, whether this system have lead to higher prices, less offers or less competition. A dispute between Netflix and the main broadband provider in Korea has been finally settled, however without giving rise to a fair share compensation.

Gahnberg / de Guzman / Robachevsky / Wan (Internet Society) – Internet Impact Brief: South Korea’s Interconnection Rules (May 11, 2022)

David Frautschy / Carl Gahnberg – Old Rules in New Regulations – Why “Sender Pays” Is a Direct Threat to the Internet (May 26, 2022)

Geoff Huston – Sender pays (September 9, 2022)

Carl Gahnberg / David Frautschy – What Lessons European Policy Makers Should Take From The Case of South Korea (September 30, 2022)

Park Jae-hyuk – Amazon-owned Twitch threatens to leave Korea due to regulations (November 11, 2022)

Telefonica’s blog: South Korea as pioneering model of fair contribution to network financing (March 8, 2023).

Dan Clancy, Twitch CEO – An Update on Twitch in Korea (December 5, 2023). Twitch confirms that business in Korea will be stopped on February 27, 2024. This is allegedly due to the costs of the bandwidth in South Korea (10 times more expensive than in other countries) caused by the national interconnection regime.

Morgan Sung – South Korean streamers struggle with Twitch’s sudden exit (February 29, 2024). The streaming giant attributed its departure to high network fees.