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Telecoms firms urge streaming services to help foot infrastructure bill

The current situation is “simply not sustainable”, say O2 and Vodafone chiefs

Vodafone, Telefónica, Deutsche Telecom, and Orange are calling on large streaming services to contribute to the cost of upgrading and maintaining Europe’s network infrastructure.

The call comes amid an ever-increasing demand for online content, with data traffic estimated to be growing by 50% per year – of which 70% comprises video streaming, gaming, and social media, according to Sandvine research.

In a joint statement, the telecom operators described the current situation as “simply not sustainable” and called for streaming platforms to contribute to the cost of upgrading and maintaining the digital infrastructure that carries their services.

“The investment burden must be shared in a more proportionate way,” they stated. “Digital platforms are profiting from hyper scaling business models at little cost while network operators shoulder the required investments in connectivity. At the same time, our retail markets are in perpetual decline in terms of profitability.”

The telecom operators argued that they are “in no position" to negotiate fair terms with these giant platforms due to their "strong market positions, asymmetric bargaining power and the lack of a level regulatory playing field”.

Hence, they urged EU policymakers to introduce legislation that will help alleviate the costs of investments in connectivity by requiring large streaming and social media platforms to contribute to the costs.

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The telecom operators didn’t name any platforms in particular. However, they used the example of an ongoing lawsuit filed in October 2021 by South Korean internet service provider SK Broadband against Netflix, following a significant increase in network traffic with the release of Netflix’s Squid Game series.

According to the court documents seen by Reuters, SK demanded that Netflix pay an estimated network usage fee of 27.2 billion won (£16.8 million) for 2020 alone.

South Korean policymakers are also considering implementing legislation that will require streaming platforms to contribute to network costs. Meanwhile, in the US, the FCC has urged tech giants like Amazon, Apple, Facebook, and Google to help pay for federal efforts to connect more American households to broadband internet.

“If we don’t fix this unbalanced situation Europe will fall behind other world regions, ultimately degrading the quality of experience for all consumers,” the companies warned.

Netflix declined to comment on the statement issued by Vodafone, Telefónica, Deutsche Telecom, and Orange.

Statista data predicts that the monthly mobile data traffic in Western Europe will reach 7.37 exabytes (EB) this year, and is expected to almost double to 13.59 EB by 2025. 

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