Fair share has not attracted the consensus that was expected

The “fair share” debate is certainly the telecommunications’ hype of 2023, both at European and national level. This subject has become an absolute priority for largest European telcos, while assuming a very important role in the digital agenda of the European Commission. However, despite the incredible mass of work for consultants, lobbyists and conference organisers generated by this debate, it is difficult to predict whether the expectations of the proponents will be ever met.

Fact is, after more than a year of discussions, position papers and events, the outcome of the debate certainly cannot be said to be positive. The front of supporters has not widened at all, while instead that of skeptics has grown, giving rise to a variegated grouping hostile to the “fair share” including much more than large OTTs and their traditional sympathizers. In this complex scenario, only the position of the European Parliament seems to be an exception, since last June 15th the assembly, probably also thanks to the successful activism of some telcos’ lobbyists, approved a “pro fair share” statement  in a document which – nonetheless – dealt with far from it (the Annual Competition Report). Moreover, that statement  was mitigated by the reference to competition and net neutrality. To conclude, it would be rash to say that the European Parliament has already taken sides in the ongoing debate: it is more reasonable instead to assume that the majority of MEPs have not sufficiently evaluated the extemporaneous paragraph and that the “fair share” match within the European assembly has yet to start, if it will ever start.

Fair share is even opposed by the historical opponents of Big Tech

It is really significant that many stakeholders and institutions, who normally would not have an interest in defending Big Tech, have taken sides against the “fair share” theory, or at least consider it a problematic or hasty issue. Among these it is worth mentioning numerous European governments (with Germany, Holland, Denmark, Italy and Austria among the most hostile), the European telecom agency Berec, commercial televisions, the Internet technical community (with various associations, including ISOC and RIPE), even telecom organizations (such as MVNO Europe, EuroIX, as well as various organizations of alternative operators), civil rights associations and consumers. Such entities do normally criticize Google & Co for various reasons (digital sovereignty, privacy, consumer rights, competition) therefore it is remarkable to see them siding against the “fair share” theory, and indirectly in favor of the large OTTs. It looks that many governments and stakeholders do not seem interested in participating in the debate by positioning themselves for or against telcos or Big Techs, while they rather appear worried about the potential negative consequences that could derive from improvident and useless regulatory interventions.

The strong point of fair share: Commissioner Breton

In other words, not only has the fair share debate failed, but it even risks becoming more complicated as the voices of those who ask for a more complete analysis of its assumptions will prevail. However, all this does not seem to have affected the confidence of the proponents, who probably rely heavily on the efforts made by Commissioner Breton, who has been very much in favor of a “fair share” initiative since the very beginning. Breton’s activism is the true strength of the “fair share” debate, but also a source of embarrassment, because both the industry provenance of Breton (Orange, one of the telcos most engaged in the debate), and his impromptu public outings in favor of the initiative, through social media or interviews, have created perplexities.

The analogies with the copyright directive

One should not underestimate the role of traditional press, which is supporting the “fair share” story telling with the ultimate result to reinforce the confidence of these supporters. However, media tends to oversimplify the debate as it was a sort of wrestling between large Techs and small telecom operators. This Manichean simplification (“Google & Co use our networks!”) is not accidental, since it reflects a problematic that publishers know well, namely their difficulties in adapting the publishing traditional business to the Internet and eventually how to blame some big online platforms for that (“Google & Co use our contents!”). In fact, the Internet tax reminds the “link tax” provided for in art. 15 of Directive 2019/790, according to which online platforms must pay a fee to publishers to remunerate them for the use (posting, publishing or even indexing) of simple, limited extracts of journalistic content. The dynamics of the debate show similarities between both fields, in particular in the fact that the subject who should pay (the OTT) considers the fee (whatever it is called: Internet tax, ancillary right and so on) to be unjust as the benefits provided by the platforms would prevail over the hypothetical use of the controversial right: in the case of copyright, the request for fair compensation from publishers is countered by the argument of OTTs according to which their platforms help distribute journalistic content, without any free-riding; in the case of “fair share”, the OTTs’ argument against the Internet tax is that online services promote the take-up of broadband networks, and therefore help investments of the  telcos.

There is no doubt that the proponents of the “fair share” were inspired, when shaping the functioning of a sort of Internet tax, precisely by the recent directive on copyright. However, they underestimated the impact: while in the case of online news it is about a non-significant segment of the digital sector (although relevant from the point of view of pluralism), with the “fair share” there is the risk of causing disruption to the functioning of the entire telecom sector.

The role of the Telecom Act

In any case, the day of the redde rationem is approaching. In order to materialize his project, Commissioner Breton is expected to file a legislative proposal as soon as possible, as the mandate of this Commission is about to expire: the European elections are scheduled for June 2024 and the blank semester rule applies according to which at a certain moment legislative proposals can no longer be filed. Due to this limited timing, Breton announced (in an informal way, i.e. with an interview with a national newspaper) a new legislative initiative, called the “Telecom Act”, to be presented by the end of 2023, therefore almost at the photo-finish. According to Breton’s announcement, the proposal intends to set up a new European industrial policy for telecoms aimed at a new structural and regulatory framework. The “fair share” is not explicitly mentioned yet, but the suspicion is that it will enter into it, perhaps in a non-glamorous way, for example in a boring and anonymous chapter dedicated to interconnection. The magic trick could be to set a mere clause in principle, then leaving the actual implementation of the Internet tax to the Commission itself on the basis of its secondary powers (delegated or implementing acts), which the Breton offices could adopt without the ordinary control of Council and Parliament. Such Machiavellianism looks unavoidable unless Breton manages to reverse the negative front that emerged in the Telecom Council of June 2 in Luxembourg, during which at least 19 European countries proved to be against or at least perplexed about the “fair share”.

In short, it is legitimate to suspect that the Telecom Act could instrumentally serve to get the “fair share” made into law in a discrete form, by confusing it with other more or less persuasive proposals to be used as bargaining chips with the Internet tax: the everlasting single market for telecom, more aids to research, the emergence of pan-European operators, etc.. Carrot and stick in short.

Need for further analysis and the opportunities to be seized, from the use of codec software to edge computing

Despite Breton’s motivations, we now know enough about the “fair share” to suggest prudence instead. Despite numerous debates and studies, the idea remains highly controversial as the main assumptions on which it is based appear questionable and contradictory as soon as one detaches from political slogans. We refer, for example, to the so-called “crisis” of telecoms; the “use” of the networks by the OTTs; the legitimacy of a further remuneration of the networks to be paid by the OTTs; the pure  marginal costs due to the increase in traffic; the actual rate of filling of the networks; the actual situation of investments in fiber or 5G in Europe; the precise use of the proceeds of the Internet tax; and finally, the impact on competition and net neutrality.

There are also some issues that should be further analyzed as they could benefit the market much more than a regulated subsidy. For example, it would be necessary to evaluate how to promote or even impose more efficient codec softwares than the current ones, in order to reduce the weight of Internet traffic in the transport networks and lighten the costs of the telcos. Furthermore, rather than promoting antagonism between the players in the sector, it would be more appropriate to encourage them to cooperate in investments, for example by promoting edge computing from which both the OTT and telco sides could derive both gains and savings.

All aspects that neutral spectators of the debate consider worthy of further analysis, and a reason not to speed up such a delicate and impactful legislative reform.