EU Still Pondering Telecom Tax On ‘Big Tech,’ Despite Little Real Evidence Supporting The Idea

from the net-neutrality-redux dept

As the EU contemplates its digital policy trajectory for the next decade, the idea that “big tech” should pay “big telecom” for no coherent reason has also managed to unsurprisingly surface. The rhetoric, that “big tech” gets a “free ride” on the Internet and should therefore give telecom giants billions of dollars, directly mirrors the policy con telecom giants have been running in the U.S. since 2003 or so.

It basically always involves claiming that Big Tech “freeloads off of the Internet” and should be forced to pay telecom giants billions of dollars simply for the honor of having their traffic touch ISP networks. To justify this mindless cash grab, telecom executives routinely try to pretend that streaming video imposes an unfair strain on their networks that they should be additionally compensated for.

It’s basically net neutrality redux, with entrenched telecom monopolies trying to leverage their gatekeeper power to force other companies to pay even more money for broadband service that’s already routinely too expensive thanks to regional monopolization.

Spanish ISP Telefonica, for example, recently penned a piece in the European press trying to claim that streaming demand was driving them to poverty, thus justifying the need for the EU to impose a new telecom tax on all streaming providers and large tech companies if we want telecom networks to function:

Telecom companies are shouldering alone the needed investment to address this increasing traffic demand, financing expansion of network capacity and coverage exclusively from revenues coming from broadband connectivity and other services provided to end-customers. OTTs (Over-The-Top) platforms, who do not compensate network operators for the cost of delivering the traffic to end customers through the operators’ networks, have a business model where profits increase by delivering more traffic, thus further reinforcing Internet traffic growth pattern and mounting pressure on network investments.

The problem? The claim isn’t true. At any level.

For one, whether it’s the U.S. or the EU, nobody gets a free ride from telecom companies. Telecom monopolies have effectively gutted competition in countless global markets, driving up costs for customers and businesses alike. They’re also hilariously and incompetently slathered with subsidies to “bridge the digital divide,” only to then be busted routinely for subsidy fraud.

At the same time, the Big Tech companies being accused of getting a “free ride” not only pay telecoms for bandwidth, but they routinely deploy their own content delivery networks, transit networks, undersea cables, and billions in additional infrastructure, all intended to improve performance and help handle the load.

As for the claim that streaming meaningfully taxes well-built telecom networks, that’s simply not true either. Telecom expert Rudolf van der Berg, for example, wrote a good piece dissecting telecoms’ claims and found them, well, lacking:

Telecom operators spend their capital investment on infrastructure – like cell towers, fibre optic cables, routers, modems, and data centres – in order to connect people to broadband networks and extend 5G coverage. Furthermore, 70-80% of their capital investment goes to assets that will last for 30 years at least. The remainder is for equipment that is upgraded every five to 10 years for better and faster services. ETNO’s demands for “fair share” payments basically mean they want CAPs to cover 60-70% of their total network costs, while at the same time already charging consumers for those very same networks.

Ever since the net neutrality debate began, telecoms have been trying to claim poverty and insisting they’re just somehow owed billions of additional dollars beyond the significant revenues and taxpayer subsidies they already collect. Their supporting evidence for this is routinely a platter of reasonable sounding, pseudo-economic gibberish that doesn’t hold up to the slightest scrutiny.

Apparently that doesn’t matter, as South Korea has implemented such a regulatory model (resulting in one South Korean ISP suing Netflix because Squid Game was too popular), and the EU continues to seriously explore it. If the EU is successful, I guarantee you’ll see a renewed push here in the States, with captured regulators like the FCC’s Brendan Carr leading the charge.

Bridging the digital divide and shoring up telecom subsidization should start with a close examination of decades of rampant telecom subsidy fraud where regional telecom monopolies routinely collect billions of dollars for networks they always mysteriously half complete. I’ve found that anybody not proposing that as a meaningful starting place for reform generally isn’t worth taking seriously.

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Comments on “EU Still Pondering Telecom Tax On ‘Big Tech,’ Despite Little Real Evidence Supporting The Idea”

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Anonymous Coward says:

New networks null commerce proposals like this.

Its already a given that new data infrastructure defined by known boundaries will propel commerce into 21st century models without the complexities of mixed economic standards, simplifying the next wave of innovation for many countries.

“Buy American” is not the only slogan in that model. “Never see blatant false advertising or all of the inventory is confiscated and removed from the market” is an evolution of commerce that is easily upheld with defined border transactions.

The digital flea market era was fun though.

Anonymous Coward says:

If the telcos are not getting enough to cover broadband costs why do they no raise their prices. This ‘tax’, if implemented, would be a price rise on broadband, but collected via third parties so that telcos can advertise a lower price that they are actually getting.

Note advertising money is part of the cost of buying goods and services, but works reasonably well as a payment method as lots of very small payments get combined into an advertising budget and passed to consumers in prices.

Anonymous Coward says:

It looks like network segregation has already started.

Instead of arguing over who owns the Internet, having a choice of data networks suits the 1st world models better.

Having seperate networks is already a win-win with how innovation is progressing. Not having to filter obsolete data keeps the fresh digital debt to a minimum.

PaulT (profile) says:

Re: Re: Re:

It’s not racist, but it’s worth remembering where terms come from. “First world” referred to the allied nations during the cold war, second world the USSR allied nations and third world others. Referring to third world can be deemed racist as so many of those were non-white, but that’s not the main focus of the original term.

Anonymous Coward says:

Smells like something the cow made

Hm… really, are these telecom companies not realizing that suing in these cases is flat out admitting that they are absolutely incapable of maintaining their business even with the lack of competition?
I would hope that any lawsuit goes something like this:

ISP: “Our customers are using too much of our service to use the internet. I need to get money from the sites they’re going to as well.”

Court: “So you’re saying that the internet is really popular and you’re customers are using too much of the service you sell them”

ISP: “No, no. We’re not getting paid by the sites our customers visit… we should get paid because those sites are using our network”

Court: “Okay, so you’re saying these web sites are also you’re customers and haven’t been paying for your service… well, then quit serving them”

ISP: “No, those sites aren’t our customers, but they’re really popular and we can see our customers using these sites a lot”

Court: “But those sites aren’t your customers, right? I mean, they have some other ISP they use and pay”

ISP: “Well, yes, but they are using our network when our customers go to their sites”

Court: “So what you’re telling me is that you can’t compete, even though you’re the only ISP in the area and your rates are fairly high?”

ISP: “There’s just too much traffic”

Court: “Really? Has there been no investment in new equipment.”

ISP: “That would cut into our shareholders yearly profits”

Court: glares

Anonymous Coward says:

why not spit the real reasons out here, instead of out and out lying? just like the USA, the EU and everywhere else doesn’t like the fact of the existence of THE INTERNET! if it could possibly do so, as would everywhere else, THE INTERNET would be completely shut down to the ordinary people, with just whatever ‘official body’ being allowed to use it. the primary reason being, all those counted among the ‘official bodies’ want to knoe everything possible, the ins and outs of a ducks backside about all of us ordinary people but nothing should be available to us about all those ‘official people and/or official bodies. that is simply because they want to be able to use whatever they have or can dream up to hold any/all of us accountable for whatever fucked up, bullshit charges and accusations they feel like throwing at us. on the other hand, all the shenanigans these fuckers ar up to, the millions being made of of our backs, should never be made available to a single person, let alone to the world in general, thanks to the Internet being everywhere, to everyone! and dont forget the money being made or what they want to be made by screwing us into the ground on whatever you can think of, without having to pay for buildings, for staff, for energies or physical goods, digital costing next to nothing to produce but making a fortune when sold!!

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