Big Tech vs. Big Telco: Top EU official says there’s no ‘battle’ over network funding

BARCELONA, Spain — A top European Union official insisted Monday that the debate around tech giants paying for their usage of telecom networks is not sparking a “battle” between Big Tech and telcos.

Telecom groups are pushing European regulators to implement a framework where the companies that send traffic along their networks are charged a fee. They say this — known as “sender pays” — would help fund mammoth upgrades to their infrastructure.

Their logic is that certain platforms, like Amazon Prime and Netflix, chew through gargantuan amounts of data and should therefore foot part of the bill for adding new capacity to cope with the increased strain.

Last week, the EU launched a consultation aimed at boosting Europe’s telecoms infrastructure. In it, there was a questionnaire asking whether to establish a digital fund at the EU or national level, or require a direct contribution from internet giants to the telco operators.

At the Mobile World Congress in Barcelona, European Commissioner for the Internal Market Thierry Breton suggested that regulation in the EU was no longer fit for purpose and that it was time to reconsider how the current model works.

“We are at the beginning of a new revolution. In the coming years, the whole industry will need to undergo a radical shift and revisit its business models,” Breton said on stage at MWC.

“The consultation has been described by many as the battle over fair share between Big Telco and Big Tech. A binary choice between those who provide networks today and those who feed them with the traffic.”

However, he insisted that there is not necessarily a “battle over fair share between Big Telco and Big Tech.”

Ha said the bloc needed to “find a financing model for the huge investments needed” in the development of next-generation mobile networks and emerging technologies like the metaverse — while also making sure that net neutrality rules aren’t undermined.

It comes as telcos attempt to reinvent themselves as cloud-based businesses. On Monday, several firms, including Deutsche Telekom, Orange, and Telefonica announced new application programming interfaces, or APIs, which would open up their networks to software developers.

There are also attempts to make peace between the two parties. Prior to Breton’s keynote, the bosses of Microsoft and Google’s cloud unit appeared virtually, talking up their commitments to the telecom industry.

The CEO of Orange, Christel Heydemann, pushed back on claims that requiring companies to pay for network usage would amount to an internet “tax.” She added that it was a “first step” toward addressing an “unbalanced situation.”

WATCH: European telcos want U.S. big tech to pay for the internet — but tech giants are hitting back