Here’s why Google, Apple, Meta may have to pay for network costs in the EU

The European Commission on Thursday launched a consultation on the future of Europe’s telecoms sector, starting a process that could require Alphabet’s Google, Apple, Meta Platforms and Netflix to pay some network costs.

For more than two decades, Deutsche Telekom, Orange, Telefonica, Telecom Italia and other operators have lobbied leading technology companies to contribute to the 5G and broadband roll-out.

They argue companies including Amazon And Microsoft Data accounts for more than half of Internet traffic.

Tech firms in response have called it an internet tax that would undermine EU network neutrality rules to treat all users equally. The 12-week consultation will end on 19 May.

EU industry chief Thierry Breton cited the huge investment needed to roll out 5G and Broadband, saying it is not targeting any company.

“The burden of these investments is heavy and heavy. And this is partly due to the low return on investment in the telecommunications sector, the increase in the cost of raw materials, and in the world geopolitical context, the cost of energy, of course, because it has a large role,” he told a news conference.

Breton said, “I want to say right away that all this reflection is not against anyone, but it is for our fellow citizens.”

A contributing mechanism could be one of the solutions, he added.

According to a document seen by Reuters last month, respondents will be asked whether large traffic generators should be subject to a mandatory mechanism of direct payments for finance network deployment and also whether the EU should create a continental or digital levy or fund. Or not.

“We hope to move very quickly so that in the summer we can come back with findings and then we’ll see what we do to continue to make progress,” Bratton said.

Any legislative proposal will need to be agreed with EU countries and EU parliamentarians before it becomes law.

“This consultation is a positive and necessary step towards correcting major imbalances in the internet ecosystem for the benefit of European users,” telecoms lobbying group ETNO said in a statement.

Tech group Computer and Communications Industry Association (CCIA) criticized the proposal.

“Europeans already pay telecom operators for internet access, they shouldn’t have to pay telcos a second time through expensive streaming and cloud services,” Christian Borggren, senior vice president at CCIA Europe, said in a statement.

© Thomson Reuters 2023