Telecoms Detail Their Dumb Plan To Force Tech Giants To Pay Them Billions For No Reason
The EU is currently proposing a plan to tax Big Tech companies, and throw that money at Big Telecom companies. For no coherent reason.
The proposal is part of the EU's efforts to craft digital policies for the next few decades. While this is purportedly for broadband expansion," it's not... really. Both EU and U.S. telecoms have a long, proud history of taking billions in subsidies and then pocketing most of the proceeds, leaving everyone in the chain with substandard service.
In reality, the effort is a lobbying gambit by telecom giants once again looking to offload their network deployment and maintenance costs onto somebody else. It's net neutrality wars 2.0: a dumb telecom gambit to extract money these companies don't deserve and can't be trusted with. All pushed by EU Internal Market Commissioner Thierry Breton, himself the former CEO of France Telecom.
Much like the net neutrality fracas of old, the effort generally involves first (falsely) claiming that tech giants eat up an unfair portion of available internet bandwidth, and should therefore pony up a significant chunk of cash to telecoms. Last week, telecom trade groups tried to pitch the EU on a plan that would let them directly tax tech companies that that account for over 5 percent of a telco's average peak traffic.
Telecom trade groups want to skip any pesky government middleman, and have the money deposited directly from tech giants into their bank accounts:
The GSMA and ETNO seem to want direct payments from tech companies, rather than having tech firms pay into a government-operated fund that would distribute money to ISPs. A contribution mechanism should be based on commercial negotiations enshrined in a framework that obliges the parties to negotiate, in good faith and based on common EU principles, a fair and reasonable contribution for traffic delivery," the proposal said.
The problem, of course, is that the entire proposal is bullshit. Tech giants aren't, of course, getting a free ride" on the internet. They spend untold billions on their own cloud storage, transit routes, undersea cables, and even (in Google's case) residential broadband access.
This traffic is also being demanded by consumers, who routinely pay more than their fair share for access thanks to regional telecom monopolization. When it comes to regional telecom monopolies, everybody - from tech giants to the consumer - pay far more than their fair share for access thanks to consolidated telecom power, limited competition, market failure, and incompetent regulators.
Stanford net neutrality expert Barbara van Schewick dropped a statement in my inbox pointing to a broader blog post on the proposal, noting that this was, once again, telecoms attempting to get paid twice for the same service:
This dangerous proposal undoes 30 years of internet economics by requiring streaming companies like Twitch and YouTube, as well as service providers like Amazon Web Services to negotiate with and pay every broadband provider in Europe.
These network fees are unnecessary and violate the EU's net neutrality law. Europeans already pay to get online, but now the ISPs want to get paid twice."
As we saw in the older net neutrality wars, policymakers and the press have been fooled into treating this entire project as a serious, adult policy proposal instead of the transparent cash grab it actually is. Telecoms have always been envious of Big Tech's" fat ad revenues, and have always believed they're inherently somehow owed a massive cut of their revenues. Even if that makes no sense.
Telecom lobbyists, and the captured regulators who love them, want everybody bogged down in policy minutiae that treats this stuff like a serious proposal. They've already convinced captured EU regulators that imposing errant fees on tech giants has nothing to do with net neutrality and therefore doesn't violate existing net neutrality rules, which is absurd.
Telecoms have also successfully implemented a regulatory system in South Korea where ISPs feel emboldened to sue Netflix for extra money simply because some streaming TV shows are popular. If the EU proposal is successful, you can absolutely expect a similar renewed push here in the States (some captured U.S. regulators have been laying the groundwork for several years).
The end result: bigger revenues for telecoms, and higher broadband and internet service costs for everybody else. All because some giant telecom monopolies wanted to be paid even more money for what's already routinely substandard service.