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

(UPDATED OCTOBER 31, 2023)

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1.         EU AND US LEGISLATION      

European Declaration on Digital Rights and Principles for the Digital Decade, COM(2022) 28 final (January 26, 2022). A joined declaration (technically not a binding act, however worth it to mention) by the European Parliament, Council and Commission solemnly proclaiming Digital Rights and Principles for the Digital Decade contains a generic refernce to “fair share”: 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.

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 above declaration, the decision contains a relevant recital (n.13) 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.”

Public consultation on the Future of the electronic communications sector (February 23, 2023). In February the European Commission published the “Connectivity Package” including the “Exploratory Consultation about the future of the electronic communications sector and its infrastructure”. The consultation consists of 62 questions divide by fours chapter. Only one chapter (consisting of 22 questions) specifically refers to the “fair share” debate (although also the second chapter contains some reference). The consultation ran until May 19, 2023 and the results were published, after a long wait, only in October 2023 (see below). Some stakeholders claimed taht the consultation document was biased (see for instance question 19 referring to “extra-financing”) with the purpose to direct the participants’ answers specifically to the fair share matters. 

US Universal Fund (according to the 1996 Telecommunications Act). In the US there is a Universal Service Fund which, inter alia, collect fees from telecom operators to finance the Connect America Fund (formerly the High-Cost Support program) which supports the expansion of rural, insular, or high-cist voice and broadband infrastructure. The fund is not currently funded by OTT, although there is frequently a debate whether they should (see for instance the US Fair Share Act proposal:  https://www.congress.gov/bill/117th-congress/senate-bill/2427). The US Connect America Fund is similar to the European universal service mechanism.

Results of the exploratory consultation on the future of the electronic communications sector and its infrastructure On October 10, 2023 the Commission published the well-awaited results of the consultation. 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 an immediate fair share legislative proposal, while some other figures appear bizarre. For instance, at pag. 7 the Commission reports that “The majority of the respondents to the relevant question (NB: mostly ECN providers) anticipated that investments amounting to up to 50% of their annual revenues within the next five years will be needed for the objectives of the digital transformation“. Let’s say that “50% of annual revenue for the next 5 years” is a non-credible statement, unless the Commission is just playing with the words (“to up”….).  Commissioner Breton apparently slowed down the fair share initiative and, instead, announced that the Commission is going to work on a strategic White Paper which will contain an analysis of the telecom market together with some legislative proposals (called “Digital network Act”) to be considered in the next mandate. Breton also mentioned that the Commission will convene a round-table with financial investors to discuss how to attract more investments to the sector.  The White Paper is deemed to be adopted in 1Q2024 while a potential legislative initiative will have to wait until 2025. During the Ministerial meeting of Léon (23-24 October, 2023) various Member States have already doubted about the need to reform the legislative telecom framework, while others have asked to be duly involved in future discussions. Thus, the fair share saga is not ended and will be certainly considered in the White Paper, however this debate looks more and more to be a “walking dead”.    

2.         EU INTERVENTIONS ON FAIR SHARE

Statement by EU commissioner Vestager on the opportunity for the OTTs to bear the network costs of the telcos (May 2, 2022). Statement 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 was seriously intending to launch this debate or she was just trying to divert attention out from other subjects (like merging in telecoms, for instance).  

Intervention by EU Commissioner Breton (May 4, 2022). Interview for Les Echos. Commissioner Breton (former CEO of Orange) does not let Vestager to play alone on this subject and relaunches it.

Letter of 54 MEPs to Vestager/Breton (Juli 12, 2022) and joined reply by them (October 18, 2022). A large group of MEPs contests the potential initiative on “fair share”, also noting the risks for net neutrality, and calls 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 confirms that, whatever the discussion will be, there is no intention to affect the net neutrality acquis.

Commissioner Breton announcing the public consultation on fair share (September 9, 2022). Interview with Le Monde. Breton announces that a public consultation on “fair share” will soon be launched, implying that the goal is to make the big OTTs to pay the telcos. Curiously, Breton lets slip a controversial statement, according to which European telecom legislation needs to be reformed because it is still based on copper networks: “Il faut se demander si notre régulation des réseaux, pensée à l’époque de l’ouverture à la concurrence des réseaux de cuivre, est encore adaptée, alors que se profile le metaverse et ses flux massifs de données”. By contrast, the current telecom framerwork, namely directive 2018/1972, has been adopted on the basic assumption to abandon copper to facilitate the roll-out of very-high capacity networks (fiber and 5G).

Statement of commissioner Breton reiterating the close launch of the public consultation (September 14, 2022). Statement submitted via the commissioner’s Linkedin profile. Starting from the President von der Leyen’s State of the Union letter of intent referring to the Metaverse, Commissioner Breton reiterates the “paradox” whereby there are increasing volumes of data being carried on the infrastructures, while revenues and appetite to invest to strengthen are decreasing. 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 announces 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). MEP’s document was not found. Von der Leyen’s reply is not public, although a leak circulated, whereby she generically reminds that initiatives should be based on a “solid base of evidence” and that a “consultation will be launched in early 2023“. Interestingly, the President remarks that “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 has rendered a preliminary opinion regarding the need to regulate remunerations of large content and application providers (CAPs) to internet service providers (ISPs), without approaching the “fair share” debate in general terms. The preliminary findings of Berec are very negative and dismiss most of the founding assumptions of the fair share doctrine. Berec does not see substantial differences with respect to the scenario of 2012, when the same initiative was discussed and rebutted in ITU.

Tweet by commissioner Breton on the occasion of the publication of the DSA (October 27, 2022). Despite the fact that the Commission should stay neutral and that solid evidence should be gathered before any legislative initiative is filed, Breton can’t help himself and on the day of the entry into force of the DSA he triumphantly recalls that the next step will be the “fair contribution of the internet giants”. Amen.

Threat to net neutrality from new fees for online services (November 22, 2022) . Parliamentary question P-003784/2022 by German MEP Tiemo Wölken (S&D). 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 denies that a direct contribution mechanism is already concretely being studied and confirms that net neutrality will be respected.

Brief of the Research Center of the European Parliament (April 3, 2023). Summary of the “fair share” debate by the EP research center, mentioning inter alia the 2023 Sandvine Report reporting the 6 US content providers that are considered to generate 48% of global Internet traffic.

 Annual Competition Report by the European Parliament, mentioning fair share. 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 woring is 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. [NB: the matter is still ongoing and it looks that the reference to the fair share will be finally deleted]

Interview by commissioner Breton to Les Echos (June 16, 2023). Breton goes on with his practice to anticipate major legislative proposals via selected French media (malicious commentators believe that this practice may be part of a electoral campaign). The interview is protected by paywall, another reason why a commissioner should not use ordinary press to make important announcement.  While insisting on the fair share initiative, Breton announces a major reform for the telecom legislative framework, with a proposal called “Telecom Act” to be filed by the end of the year and encompassing measures concerning deregulation, market integration, telecom consolidation as well as support for network investments and R&D. NB: after few months the announcement has been downgraded, see below.

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 is starting 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 will be table by the end of the year. Instead, the Commission will prepare a White Paper (to be adopted in 1Q2024) which will serve as a strategic background for a future, potential reform of the European telecom framework. Such reform, called “Digital Network Act”, will 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 have already doubted about the need to reform the legislative telecom framework, while others have asked to be duly involved in future discussions. Breton also mentioned that the Commission will convene 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.   

3.         NATIONAL INTERVENTIONS ON FAIR SHARE

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 rejects 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). Document is not public. A group of 7 countries (Denmark, Estonia, Finland, Germany, Ireland, Holland, Sweden) suggests a careful approach on the issue of “fair share” and asks 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.

Letter by 48 MEP supporting the fair share initiative (September 15, 2022), and reply by President Von der Leyen (December 22, 2022). MEP’s document was not found. Von der Leyen’s reply was leaked: she generically reminds that initiatives should be based on a “solid base of evidence” and that a “consultation will be launched in early 2023“. Interestingly, the President remarks that “lncreasing volumes of data on the infrastructures need to be met through adequate returns and appetite to invest, especially for mobile networks“. 

Informal position of German government (November 29, 2022). Following a parliamentary question, the German government takes 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 takes a negative on the fair share initiative, considering that it will jeopardise the Internet ecosystem. This position has 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”. He added that the German government will answer the EC consultation.

German-Dutch paper referring to ” facts-based analyses” (March 27, 2023). In a joined German-Dutch declaration regarding cooperation in various mabits, the two countries remind 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.”

Informal 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 does not currently see any 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. 

Poland’s position on EU solidarity fund (May 16, 2023). The Polish government has 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 is reported to have been informally withdrawn by the Polish government.

Interview to Belgian regulator  (May 17, 2023). There is no investment gap in Belgian market, telecom regulator says.

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 recognises 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 are 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 does 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 is arguably 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 On August 4th, 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 communications are not public, however leaks may be found on the Internet. Subsequently, at the Ministerial meeting of Léon (23-24 October, 2023) Italy, which participated through undersecretary Alessio Butti and Industry Minister Adolfo Urso together, has been reported to have confirmed its neutrality position, while asking for more deeply analyses to be carried out. Neverthelss, after the meeting Minister Urso disclosed a press note in which he expressed a more favourable approach to fair share. 

4.         STAKEHOLDERS’ POSITIONS AND INTERVENTIONS

First statement of ETNO on the fair contribution issue (November 29, 2021). Self-explanatory.

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. The ISP had a long legal fight with Swisscom.   

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: in the same time TIM is offering the lowest prices in Italy via its low-cost brand Kena.

Letter by 34 Civil Society organizations to commissioners Vestager and Breton (June 8, 2022). The various associations challenge 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 disputes 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 in the market.

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.”

Note by ETNO regarding the preliminary assessment of BEREC (October 11, 2022), and by GSMA (October 12, 2022) . Both associations appear disappointed by the BEREC’s preliminary assessment and firmly commit to provide new data and arguments to make their mind to change.

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 of EDRI and Epicenter.works 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.works and other digital rights associations against SPNP (December 14, 2022). Joined letter of Epicenter.works and other digital rights association to the European Commission reiterating, again, the concerns vis-à-vis a potential SPNP proposal.

White paper on fair share by ECO (December 19, 2022). Paper by the German Internet association called “Internet Interconnection and Infrastructure: on the Debate of Infrastructure Cost Sharing”. Remarkably, Deutsche Telekom is a member of ECO.

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“. I disagree, this statement is legally controversial, since net neutrality rules do not mandate IP interconnection at any cost. However, once the interconnection is in place, then there is the obligation not to discriminate ecc. Evidence of that is that TIM, like various other telcos, are traditionally used to select (and refuse) operators to peer with.   

AMETIC requests 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 hilarious rebuttal by Rudolf Van der Berg

Alessandro Gropelli (ETNO) – Perché le big tech devono pagare le reti di telecomunicazioni (March 28, 2023). Article for Wired Italy.

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. Third actors such as local cloud providers, broadcasters or local cloud providers & CDNs should not be considered.

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”. 

Positions by various stakeholders accompanying related submissions to the European consultation (May 19, 2023 onwards)   Various stakeholders have published articulated position papers accompanying and explaining their views and their answers regarding the European exploratory consultation. Needless to say, such documents reflect positions that the same stakeholders have already expressed in various public occasions, although this time there might be additional data and reasoning. Here a (non-exhaustive) list of such documents: 

ISOC / Internet Society 

Computer & Communications Industry Association (CCIA Europe)

US government (via the Department of Commerce’s National Telecommunications and Information Administration – NTIA)

Digital Europe

Digital SME

Creation of a “pro-fair share” website (May 2023). Some telecom organistions which have so far expressed support for the so-called “fair share” proposal have joined forces and created a website to centralise news and arguments on the matter. It is called “the Fair Share Initiative”. Supporters include Deutsche Telekom, Orange, Telefonica, Vodafone, ETNO, GSMA, Altice, the alliance of the technology industry, Bouygues, Digicel & Fastweb.

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, have 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 have made a new communication which is reported by Financial Times. 

5.         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.

6.         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. 

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).

7.         JURISPRUDENCE, LEGAL DISPUTES, INCLUDING THE SOUTH KOREA’S SPNP MODEL

TIM’s depeering (2012). In 2012 TIM decided to abandon public peering and started to require paid peering. Although there was a debate about the legal and competition complaince, no legal disputes arose. More information here.

Cogent / Orange litigation (2012). 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.

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. 

Init7/Swisscom in Switzerland (2020). Following legal procedures starting in 2013, incumbent Swisscom has been found dominant on the IP interconnection market and obliged to set cost-based prices for peering.

Deutsches Forschungsnetz/Deutsche Telekom (2021). During the Corona pandemic, the Deutsches Forschungsnetz (German Research Network) was confronted with increasing data traffic due to increased home work and overloaded transfer points. Because of congestion, the association turned to another upstream service provider and also offered direct peering to Deutsche Telekom, which refused. In contrast, the association was able to agree on a fee-free interconnection with other German ISPs.

Facebook sued by Deutsche Telekom over Internet connection fee in Germany (2022). A legal proceeding is currently pending. Apparently, Facebook was paying an annual bandwidth-based fee (peering?) since 2018, then the agreement was terminated due to disagreement over next economic conditions. Public information are not available, some news are available on Mlex. 

8. 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).