‘Telecom Insights Week’ brought together stakeholders to discuss the internet ecosystem and how it should be funded in the future
ETNO asks if big tech should pay its way: On 16 May 2022, ETNO hosted an event to explore whether those participating in, and indeed deriving value from, the digital economy are contributing sufficiently to its fundamental building blocks. Prior to the event, ETNO published a report on the implications of an unbalanced IP traffic market on European socioeconomic welfare. The study adds to the growing body of literature surrounding the balance of power and burden of investment responsibility between big tech and telcos, and follows reports from WIK, IDATE and more. As the EC asks whether market actors benefiting from Europe’s digital transformation should make a “fair and proportionate contribution” to its telecoms networks, ETNO’s study provided a platform for discussion.
CCIA said the argument has been made and rejected before: During the panel, DG Connect highlighted the EU’s efforts to plug the investment gap, including bloc-wide funding programmes. BEREC noted tech firms’ investments in cloud and subsea cables, but also that a handful of players are now large enough to shape market dynamics and that it would consider an analysis of content delivery networks. On whether this therefore warranted a contribution to funding traffic movements, the CCIA (mostly representing internet companies) argued that content drives traffic to telecoms networks and that the real problem is telcos are struggling to charge customers for data consumption. As expected, DT disagreed, calling for repairs to the current system. It stated that today there is one side that benefits and another that pays the bill. Interestingly, BEREC suggested that consolidation may help operators gain scale and deploy next-generation networks faster.
GSMA considers regulatory implications of the evolving internet ecosystem: The second event was the GSMA’s deep dive into the internet value chain and the dynamics driving it. The event followed a study that outlined how the largest internet players have expanded their presence across the value chain, with the services of just six companies now accounting for over 55% of all traffic. It argued that with traffic growing by over 30% a year, investment in network capacity and capabilities is needed; however, telcos are experiencing a two-sided squeeze, which is leaving them to seek returns from a decreasing revenue pool.
Telcos call for consolidation to unlock investment: During the first panel session of the GSMA event, Vodafone urged regulators to allow M&A and argued having more parties paying for telecoms networks would lead to better outcomes for consumers. Credit Suisse recognised that the region’s telecoms sector has long underperformed due to revenue, capex and leverage pressures; however, they are yet to be convinced by the fair share argument. In Credit Suisse’s view, it does not necessarily follow that unfavourable regulation in telecoms should be the concern of another industry. In the second panel, stakeholders from the political and policy communities appeared aligned on the need to promote digital skills and access to quality connectivity, as well as remaining conscious of the challenges presented by changing market conditions. They claimed to understand the apparent investment imbalance and that forthcoming EU regulation would be the appropriate instrument to address the matter. Telefónica underlined telcos’ responsibility for the connectivity elements of the Digital Decade but also called for pro-investment outcomes that would enable consolidation. It sees resistance towards M&A softening, but cautioned that it cannot be sure until the first deal is notified to the EC.
Source: https://etno.eu/library/reports/105-eu-internet-ecosystem.html
