EU plan to make big tech pay 'fair share' of telco fees reportedly weeks away

The European Commission could issue draft legislation calling for cloud providers and hyperscalers to offset traffic generated by their services by directly funding telco infrastructure as early as March. However, the draft won't come before the European Commission completes a public consultation and questionnaire that will …

[SundogUK]

I am not sure I understand the problem they're trying to fix with this. It's not big tech that's using up the bandwith, it's the users and I assume they are already being charged what the market will bear and the telco's are making a profit. What gives?

[alain williams]

Everyone should pay to get to the Internet backbone

This includes big tech and people at home.

So if you spend all day on Youtube or Netflix then expect to have to pay for the large number of GB that you will use -- just as Youtube/Netflix will have to pay for those GB to get to the backbone/Internet-exchanges.

The problem is that ISPs like to advertise all-you-can-eat packages at some low cost. They then find that they lose when a couch potato burns through many many GB.

The solution is simple: £X gets you Y GB, if you want more then you have to pay more. The trouble is that the ISP marketing departments do not like this reality and go crying "unfair" to government.

[NewModelArmy]

Re: Everyone should pay to get to the Internet backbone

To counter that slightly, my bill is increasing by £3 per month for the telco to install more equipment to cope with the streaming load.

I don't stream in general, although i have streamed 1 missed program, and one series of 10 episodes due to the BBC not making it available on terrestrial TV. Else, everything is freeview.

As such, i am subsidising those people who do stream. So a tax on those providing the services to offset the cost would (hopefully) be beneficial to me. Though i doubt there will be a £3 drop in costs for my broadband.

[doublelayer]

Re: Everyone should pay to get to the Internet backbone

Or in other words, people's desire for bandwidth has increased, and that requires them to upgrade hardware. It's not a tax on you; it's what happens when people want a better service than has been available. It doesn't much matter that they're using it to consume video. If users were all using their bandwidth for another purpose, such as remote work or hosting their own servers at home, you'd have the same situation.

[unimaginative]

Re: Everyone should pay to get to the Internet backbone

Change telco?

If you do not stream you do not need a lot of bandwidth or transfer.

You could ditch your landline altogether and get a mobile connection cheaply - e.g. 1p mobile at £15 for 50Gb (tethering allowed).

At the other end Andrews and Arnold have a great reputation and have bandwidth limits.

[Charlie Clark]

Re: Everyone should pay to get to the Internet backbone

Tariffs based on bandwidth rather than volume are standard because they better reflect the costs incurred for the services provided: the max volume for specified bandwidth for a period of time is also easily calculated.

But the main reason that the internet remains open is that interconnect agreements generally forbid preferential charging: a packet is a packet, whether it's carrying video or e-mail. The interconnects are also where any adjustments should be made. This can and should be done without any kind of political interference. It would be a big mistake to threaten this just to make it easier for the telcos to provide similar services: vertical integration never favours the customer.

[M.V. Lipvig]

Re: Everyone should pay to get to the Internet backbone

All you can eat is how it should be. If I pay an ISP for X up and Y down, I expect to be able to use X up and Y down 24x7. That is what I'm paying for. Large users are buying fixed bandwidth circuits, much larger than what I use, and should expect the same. The problem here is, the telcos want to oversell their networks by 20 percent or more, much like an airline overselling seats. And, there is a means to do that, for customers that only need occasional bursts. My company has many customers that will order a 1MB data circuit, but we deliver it on a DS1. They can burst up to 1.5 (DS1 is 1.544MB) if the router has the room, but know that they're only guaranteed 1MB. And this is where the telcos are getting greedy - they don't want their customers using all their guaranteed bandwidth as they want to doubledip some of that bandwidth to others.

The solution is to not allow the telcos to oversell their networks. Instead, require them to provide what's being sold. My ISP doesn't seem to have any problems making money off me, and my connection is all I can use - if I want to use my full bandwidth 24x7, it's available to me, and I pay a flat rate for it. If they sell them as 24x7 full bandwidth circuits up front, the customers are paying for the infrastructure every month, and the big boys usuallly have 2 year contracts so there's no surprises on either side. There should be no reason the ISP isn't covering their infrastructure costs.

[Phil O'Sophical]

What gives?

EU politicians up for re-election, trying to show that they're tough on profit, and tough on the causes of profit.

[Charles Bu]

Re: Everyone should pay to get to the Internet backbone

My thoughts exactly, Shirley. If users gonna use, bandwidth gonna band. And whatever it means that's a fact.

Also, I thought users already paid for this by paying more for a higher-allowance mobile signal... I hope those naughty telcos aren't attributing mobile usage to fixed line usage - that'd be quite easy to baffle European officials with.

[heyrick]

Hmmm...

I pay €70/month for my internet (plus mobile, plus VoIP landline).

Multiply by the number of subscribers to the national telco, I can't help but think that maybe it's a question of how the money is being spent, rather than a lack of it.

What worries me is not just the potential Balkanisation of the internet (those who pay vs those who don't), but also the fact that what this will really translate into is price hikes for everybody.

[Missing Semicolon]

Re: Hmmm...

I don't get it. I pay for my internet. The big content providers pay for their internet. Why do the ISPs want paying again?

[unimaginative]

Re: Hmmm...

Exactly, its double dipping on service charges, and enforced by law.

Its a practice that is banned by law in many industries: the UK recently banned letting agents from doing this, for example. There are lots of bans on financial services in many countries.

This is just big business lobbying politicians to let them use monopoly pricing power (you cannot reach an ISP's customers if they block you) to raise prices.

[Anonymous Coward]

Re: Hmmm...

This seems to be about Telcos not ISP's.

Telcos built massively expensive infrastructure, on the assumption they could use it for lucrative services like toll calls.

Now they are left with big infrastructure bills, but no lucrative businesses, whilst the OTT business get to take the cream.

I don't have much sympathy for phone companies, but here, the government had to cough up to deploy fibre, and 90% of it's bandwidth is used by US based internet companies, who bill directly from offshore and don't pay tax, and about 1% of bandwidth is used for income generating, tax paying economic activity that has to fund the fibre.

It don't add add up.

[Rahbut]

If the big companies account for 50%+ of traffic, then it would seem the telcos are selling a service to access the big companies... meaning they should probably foot the bill for access, or not provide access (and lose customers to competitors who do). If they sell an "upto <blah>mbps" service, they should expect people to want to use it - irrespective of the origin of the data - even if the business model is to sell an over subscribed/contended service for as much as they can get away with... the inter-connects are the price of providing a service. There are no options to buy "cheap internet, but without tiktok, youtube, facebook and netflix" - even though there are some that might actually like the option.

It sounds like a rerun of the net neutrality stuff in the US that got talked about a few years back, where the ISPs didn't want to just provide dumb pipes, but were also trying to "add value" with their own TV services (or whatever).

Whatever happens, customers will pay more to cover these new costs because either their netflix sub will go up or their telco sub will... because neither of those two groups of companies ever try to price gouge at every available opportunity...

[Crypto Monad]

"In May, the GMSA estimated that cloud providers and hyperscalers like Amazon, Google, Microsoft, Apple, Meta, and Netflix account for 57 percent of global traffic."

Without observing that on a broadband access network, subscribers account for 100% of that traffic (and already pay for its transit).

[Martin Summers]

Nuts

So if I purchase something physical online or over the phone, should that mean I never have to pay postage again because the company I bought it from are one of the big senders of parcels and clog up the network and they have to pay to send it to me?

Are these people nuts or what?

[Mishak]

Hang on a minute...

Service providers pay a fee for their internet connection.

Customers pay a fee to their ISP for internet access.

So, they are really saying Provider -> CDN is ok, but they want the provider to pay for CDN -> customer (which the customer has already paid for)?

[Panicnow]

Telco Entitlement

As the founder of PIPEX the first commercial ISP in Europe, which became by far the largest international ISP. This claim by Telcos is all about them trying to reestablish their cosy monopolies. As usual they are corrupting the political system to enable them to extort money. Rather than do their job of investing and innovating in the services their customers demand. ( Which is far harder work for management, than lobbying politicians.)

While I have no sympathy for large tech, when they also abuse their monopoly, at least they innovate and invest. Telcos, always drag their feet on investment and seek to slow innovation.

I hope(but do not expect) the EU politicians to do the right thing and put kerbs on the abuse of ALL monopolies in the interest of its public. Rather than support one monopoly over another.

[Anonymous Coward]

Re: Telco Entitlement

Telcos, always drag their feet on investment and seek to slow innovation.

Having worked for one Telco, and with several others, I must disagree. They are frequently at the forefront of innovation, although the publicly-owned ones sometimes struggle to be allowed to spend money on it.

[Malcolm Weir]

Just like the ideas for tax on recording media...

Techdirt went a bit, err, vigorous over this: https://www.techdirt.com/2023/01/05/big-telecoms-quest-to-tax-big-tech-for-no-reason-will-cause-massive-internet-instability-group-warns/

The "fair share" language is pure gibberish: SOMEONE provides Netflix / Google / Amazon / Etc with connectivity to the network that eventually gets to the consumer. That someone charges for the connectivity, as does the provider of the service to the consumer. But the Telco's (who have not exactly covered themselves with glory on the whole "provide service to the consumer" front) want to reach around the infrastructure providers and get cash directly from the big names.

The normal "market forces" way this should work is for the backbone providers to raise their rates to allow for their infrastructure improvements. If priced according to actual utilization (as opposed to link speed), then the content providers would pay more and the ISPs that provide service to the consumers would pay more, so they'd likely charge more. But what's happening here is an attempt by the telco's to bypass the backbone provider and collect taxes directly from the content producers. In short, the telco's want to collect money from organizations that they don't do business with, in order to avoid the perception that they're charging their customer (with whom they do business) to do whatever it is that they should have been doing for decades!

[Anonymous Coward]

Re: Just like the ideas for tax on recording media...

"in order to avoid the perception that they're charging their customer (with whom they do business)"

and the customers will then have to pay more as the content providers will put their prices up to maintain their own revenue levels.

[R Soul]

Connecting content providers and eyeball networks

"SOMEONE provides Netflix / Google / Amazon / Etc with connectivity to the network that eventually gets to the consumer."

That's generally those big content providers themselves. They either have their own global fibre systems or have a hefty percentage of the companies that operate these. This means the cost of moving data over those fibres between CDN DCs and their cache nodes installed INSIDE the eyeball networks is essentially zero.

ISPs just have to pay the cost of distributing/forwarding that content inside their nets. Which they'd have to do anyway no matter how that content entered their network. ISP transit and IXP interconnect costs are lower since traffic from the big bandwidth hogs generally doesn't have to go through these. End users get lower latency/jitter/etc because these CDN cache nodes are not too far away from their edge devices. The CDNs get happier customers and also save zillions on transit and IXP interconnect costs, thanks to their investment in intercontinental fibre.

Everybody wins, apart from the global transit providers who have been bypassed. Many of those transit providers are... drumroll... big telcos!

https://en.wikipedia.org/wiki/Tier_1_network#List_of_Tier_1_networks

Their "fair share" argument is epic bullshit. Big Telco is whining (again) because their 1990's business model for global transit no longer works. It's dying. That's partly because they jacked up prices to the point where market forces found an alternative approach which started killing their cosy cartel. Fuck 'em.

Expecting content providers to pay the infrastructre costs at transit providers or eyeball networks is as ridiculous as expecting TV manufacturers to pay for the capex and opex of TV broadcasters. Or email providers pay telcos for running the mostly dead telex and telegram services.

[IGotOut]

They also miss the point.

Are they going to the likes of Cloudflare, Akami and even Netflix, for creating services that SAVE the Telco money (Netflix offer to install CDNs for their service in the Telcos DCs)

[Anonymous Coward]

Re: They also miss the point.

That's doesn't save telcos money, unless you say they save the money to fatten their pipes to allow Netflix traffic go through - but it would be Netflix to lose customers if their streaming doesn't work well enough. Do Netflix actually pay enough for using telcos DCs? Or tries to put one against the other because customer could shift to the one that gets the CDN on Netflix terms?

The problem from the telco perspective is big OTTs directly connects to higher tier network and pay them (having a lot of leverage, probably) - but the lower tier one has to carry that traffic also and in some countries a silly fight among them brought prices too low (here you can have a 1G or even a 2.5G connection for less than 25/30 euro/month, you might pay more for an ADSL, since they wish to quit it) while VDSL and GPON started to require bigger network investments. Many are being subsidized by Eu and governments money, but silly expenses (ads...) and bad management put many of them in a bad shape. They are slowly increasing the price (some tying them to inflation, with a minimum yearly increase anyway) and using 10G connections as a premium more expensive tier, but they cannot raise prices too much suddenly - they might start to lose customers (i.e. people abandoning fixed connections for mobile ones only). They were so focused on tearing off customers from each other - because mysteriously their performance was measured on such metrics like "number of new customers" instead of actual profitability and number of "customers that doesn't switch every three months", that margins became razor thin. Even forcing customers to get modem/routers at 10X their actual prices didn't help much, or early termination/setup fees.

As telco attempts to sell other services failed badly (including hoarding user data, encryption denied them a lot...) since many of them were monopolist that never learnt to earn in a different way but charging customers as much as they could for basic services, charging OOTs became an a old wet dream of theirs - but for how much I dislike many of them, it is something alike asking car manufacturers to pay highways and traffic fees because they built and delivered the cars. Or charging both parties of a phone call (when each call was charged), or letter/parcel delivery, or TV set makers for broadcasted shows. It could be done, but looks a little silly and could have adverse effects.

[Anonymous Coward]

Re: They also miss the point.

Do Netflix actually pay enough for using telcos DCs?

That's generally not how the business works any more. CDNs usually pay their costs for fibre and cache node(s) to eyeball networks. It saves $$$$$ for both parties. However small ISPs can be disadvantaged if they don't have enough customers or internal traffic to make it worthwhile for a CDN to show up.

[Anonymous Coward]

Re: They also miss the point.

That just shows the OTTs have the upper hand. It's the OTT that gains more from local CDNs (and they want them even more "edgy" to sell their services better) - but if ISPs have to accept the OTTs term it means is not a "free market". ISP should charge more for hosting OTTs systems - that would make sense. Especially since these are the systems generating the long-lasting connections with an increasing bit rate. For example here in Italy what brought network to their knees wasn't the pandemic work at home switch, it has been Serie A football moving from Sky (satellite) to DAzn (live streaming). Probably it would make also sense asking money for specific traffic management - i.e. multicasting - for such kind of transmission, given they need specific setups and management.

[Tim99]

OK, another car analogy

As LDS has already used a car analogy on the use of highways and traffic fees - How about another one?

The damage a vehicle does to a road is proportional to the 4th power of its axle weight: A small car, say a 2023 VW Polo, weighs 1.15 tonnes - Axle weight factor = 0.109. A VW Touareg weighs 2.15 tonnes - Axle weight factor = 1.34. So if we do come up with some value to be paid by the original purchaser to maintain road surfaces the Touareg purchaser should pay about 12 times more.

It's more extreme with a lorry: Assume a car axle weight of 1 ton (2 axles) vs a 44 tonne lorry have a maximum axle weight not exceeding 8.5 tonnes (6 axles) the "damage" is 1,650 times more. If you based this on say half of UK annual Vehicle tax rates, the lorry would be £140,000 p.a. Obviously the road transport lobbyists would not accept that, and this "Modest Proposal" ignores any societal good of road haulage...

I suspect that telco costs are more linear, or more likely, come done as traffic increases, so how about the punter and big tech pay? I believe that a punter with the info they give for searches, maps, contacts, etc., can be "worth" about $35-100 US dollars p.a. to Google. Maybe charge say 20% of that? :-)

[SundogUK]

Re: OK, another car analogy

A packet is a packet is a packet. The cost is the same regardless of who sends or receives it. As others have noted, this is just rent-seeking by the big telcos.

[damocles]

As the numpty in charge of making sure the company webshop doesn't fall over I've noticed that Google and Pinterest tend to be responsible for anywhere from 10-75% of our bandwidth use. I did suggest blocking them but the marketing people turned up with torches and pitchforks. I dread to think how much Google and Meta account for in hidden costs, the one's they tell you about are bad enough.

[Anonymous Coward]

"This can be seen by mandatory termination charges implemented in South Korea, which has resulted in reduced quality and security of the services provided to end users."

Yup, I've heard the wailing and gnashing of teeth from South Korea about their notoriously inadequate networks.

Why just the other day they wanted foreign aid from Australia**, so they too could have an NBN

**There is absolutely no truth in the rumour that North Korea was offering to upgrade the NBN, as it is too slow and unreliable to steal crypto economically.