Europe shows little sympathy for ‘fair contribution’ claims

The main pan-European communications regulatory group has found no evidence that calls to make big tech companies pay towards the cost of telecoms networks are justified.

While it’s only a preliminary assessment, the conclusions of BEREC (Body of European Regulators for Electronic Communications) will come as a bitter blow to European telcos. They have long argued that the companies responsible for most of the data traffic they carry – the big streaming video providers – should be compelled to contribute to the cost of building and maintaining their networks.

In a published document titled ‘BEREC preliminary assessment of the underlying assumptions of payments from large CAPs to ISPs’ (in which CAPs are content and application providers), the body concluded it had ‘found no evidence that such mechanism is justified given the current state of the market.’

The 16-page report is divided into six sections. The first sets the scene, summarizing some of the factors that could justify regulatory intervention. The next section on ‘traffic causation’ reflects on the established fact that the traffic in question is ‘pulled’ by the end users rather than ‘pushed’ by the provider.

Section three – cost drivers – cuts to the heart of the matter, which is the assertion that an increase in traffic directly translates into higher costs for the telcos. BEREC is far from convinced that such a relationship exists to any significant extent, which would appear to be a deal-breaker. How could Europe possibly demand extra payments from US Big Tech, when it can’t even make the financial case for it?

Mutual interdependence is covered next, which notes that consumer demand for the types of content in question is a significant driver of CSP business. So viewed in that context, streaming video traffic is an asset rather than a liability. The next section states there is ‘no evidence of “free riding”, which seems to cover much of the same stuff as section three, while the final section offers the conclusion revealed at the start of this report.

ETNO, the European telecoms association most responsible for pushing the ‘fair contribution’ argument, was understandably disappointed with the BEREC report. “BEREC’s preliminary assessment does not bring new data to the table,” it sulkily stated in a published note, before indicating its continued hope that the full assessment with feature unidentified new data more favourable to its cause.

That data would surely need to clearly demonstrate extraordinary extra costs directly incurred by telcos from their transmission of streaming video or indeed any future data intensive applications such as the metaverse. Since ETNO has apparently failed to present such data so far, there’s little reason to believe the main assessment will deviate significantly from the preliminary one, other than in length.

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