Supporters and opponents of the “fair share” telecommunications concept—i.e. forcing the likes of Netflix and Meta to pay telecommunications network operators for carrying their traffic—can agree on one thing: It’s dead in Europe, at least for now.
I wrote about the EU’s fair-share debate earlier this year, but here’s a quick recap. Extracting such fees from Big Tech is a long-standing dream of big telcos, but net neutrality—the principle that network operators must treat everyone’s traffic the same—kept it off the table for years. However, with anti–Big Tech protectionism being in vogue, and with telcos facing major network upgrade costs, and with EU digital chief Thierry Breton being a former telco CEO, the operators recently launched a big lobbying push to put “fair share” up for consideration again.
Breton obliged earlier this year, adding the subject to a public consultation about reforms to telecoms rules. For a while there, it looked like Europe might significantly change the commercial dynamics of the internet.
But on Tuesday, the European Commission published the results of Breton’s consultation, noting that pretty much the only respondents in favor of direct “fair share” payments were the big telcos—content providers, consumer organizations, content delivery networks, and citizens broadly rejected it, because of the threat to net neutrality and the potential for consumers to face higher prices and less content choice.
Breton then published a statement on LinkedIn, calling for a future “Digital Networks Act” that would “redefine the DNA of our telecoms regulation”—but as this Commission’s term ends in mid-2024 and the EU’s legislative process lasts years, that’s not appearing anytime soon. His post briefly referred to the “fair share” debate, but didn’t come to any conclusion more solid than: “Finding a financing model for the huge investments needed is an important issue that we will need to deal with.”
“Investors wanted presents under the Christmas tree; instead, they got a Christmas card,” complained John Strand—a prominent telecoms consultant and big fair-share fan—in a research note today. “From the point of view of shareholders, the European Commission says that shareholders should not expect good news for the European telecommunications companies until the next Commission. This means sell telecom shares now, place the money somewhere else, and start buying them again in 2025 should good news come from the European Commission.”
“Breton was not left with much option but to shelve the ‘fair share’ proposal considering its wavering support in Europe, especially from member states,” Konstantinos Komaitis, a prominent net-neutrality advocate and nonresident fellow at the Atlantic Council, told me today. (Indeed, the Italian government warned the Commission a couple months ago that the proposal was premature, lacked a data-driven basis, and could create “a vicious cycle of higher prices, lower demand, less choice, and less usage to the detriment of all market players and consumers.”)
However, Komaitis said the issue was “not dead in Europe and will certainly follow the incoming Commission.”
There’s another problem, too. As I wrote in March, the EU’s consideration of “fair share” was likely to prove globally influential. And as noted in a letter from civil-society organizations to the world’s governments yesterday (spearheaded by Komaitis), India and Brazil are now also considering the concept, because the EU did the same. “We ask policymakers and governments from around the world to stand against the imposition of direct or indirect payment obligations to the benefit of only a handful of telecommunication operators,” the civil-society letter read.
As Strand sees it, the European Commission’s consultation results are “a gift for telecom operators outside the EU which wish to further their already advanced efforts on broadband cost recovery,” as it “offers a valuable and statistically significant overview of the key stakeholders, the challenges, and solutions.”
“The future for fair share is brighter outside the EU,” he concluded. More news below.
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David Meyer
