German digital minister sees no justification for fair contribution

More politicians are weighing in on whether telcos should be permitted to charge content companies for carrying their traffic.

In an interview with Welt (in German) this week, Digital Minister Volker Wissing described the free and open Internet as “a great asset that needs to be protected,” before stating that he does not support intervening in the market. Similarly in February, the Dutch government said charging content providers might be incompatible with net neutrality, and might lead to higher prices for streaming services.

The European Commission’s consultation on the future of electronic communications and infrastructure includes the thorny subject of whether big traffic generators like Facebook, YouTube, Netflix and so-on, should have to financially contribute towards network rollout costs.

The deadline for submissions was last Friday and as such, those on both sides of the argument have been making their voices heard even more than usual.

For his part, Wissing warned that charging content application providers (CAPs) would put smaller players at a disadvantage, would make Europe a less attractive location for business, and might result in higher fees for consumers since content companies would seek to recoup their costs.

“In addition, every market intervention requires a justification – I don’t currently see such a thing,” he said in the report.

His comments are in lock step with the German Federation of Consumer Organisations (vzbv), which last week warned that levying fees on CAPs would result in less content and choice, and higher costs.

“The European Commission’s idea of data fees for streaming services, Google, and other Internet content providers threatens the whole concept of an open and free Internet – without any reasonable justification,” said Ramona Pop, executive director of vzbv. “The negative consequences for consumers, competition, and net neutrality must be given greater weight than the profit concerns of the telecommunications industry.”

Telcos are understandably arguing the point that this is about network investment rather than profit.

Vodafone, one of the more vocal advocates for fair contribution, warned late last week that Europe’s digital future is at risk unless there is a regulatory reboot.

In a wide-ranging statement on Friday, the UK-based telco said last year, nearly 20% of expenditure on network upgrades could be directly linked to managing traffic growth driven by the big over-the-top companies.

“The situation is unsustainable. Simply put, telcos want to continue investing in network upgrades for the benefit of Europeans, but cannot continue shouldering that cost alone,” Vodafone said.

“Europe can address this situation with new rules that ensure those companies extracting the most value from investment in network infrastructure, such as the largest content generators, also make a fair contribution to the costs of telecoms networks. This could be based on a regulatory framework that facilitates direct payments from the largest traffic generators to the telcos that provide them with network-based services.”

Industry groups ETNO and the GSMA have also made similar arguments in a joint submission to the EU’s consultation.

For all their lobbying, one thing telcos don’t seem to be talking about is what would happen if the big traffic generators refuse to blink, and instead opt to withdraw their services from networks that want to charge them.

As stand-offs go, it would be incredibly high profile, and given that networks need compelling content in order to justify charging their users to access them, it seems like a stand-off that telcos would ultimately lose.

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