European telcos want U.S. tech giants to help fund their networks

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They say the U.S. companies should pay to use the EU telecom networks they rely on so heavily.

This week Reuters reported that chief executives of Deutsche Telekom, Vodafone and 11 other major European telcos are demanding that U.S. tech giants should bear some of the costs of developing Europe’s telecoms networks. This, theysay, is only fair because those companies they use the EU networks so heavily,

The call by the CEOs comes as the telecoms industry faces massive investments for 5G, fibre and cable networks to cope with data and cloud services provided by Netflix and Google’s YouTube and Facebook.

Investments in Europe’s telco sector rose to 52.5 billion euros ($59.4 billion) last year, according to Reuters.

“A large and increasing part of network traffic is generated and monetized by big tech platforms, but it requires continuous, intensive network investment and planning by the telecommunications sector,” the CEOs said in a joint statement seen by Reuters.

“This model – which enables EU citizens to enjoy the fruits of the digital transformation – can only be sustainable if such big tech platforms also contribute fairly to network costs,” they said.

A primary target: streaming services

The CEOs did not mention any tech firms by name, but Reuters understands that U.S.-listed giants such as Netflix and Facebook are companies they have in mind.

Signatories to the letter include the CEOs of Telefonica, Orange, KPN, BT Group, Telekom Austria, Vivacom, Proximus, Telenor, Altice Portugal, Telia Company and Swisscom.

The CEOs also criticised high spectrum prices and auctions, used by EU governments as cash cows, saying that these artificially force unsustainable entrants into the market.

EU lawmakers’ attempts to scrap surcharges on intra-EU calls also got short shrift from the CEOs who see this sector as a source of revenue from business users.

“We estimate that they would forcibly remove over 2 billion euros revenues from the sector in a 4 year period, which is equivalent to 2.5% of the sector’s yearly investment capacity for mobile infrastructure,” the companies said.

EU lawmakers have to discuss their proposal with EU countries in order to move forward with implementation. Reuters suggests that the EU telcos may struggle to find agreement with the bloc members.