EXCLUSIVE Europe’s telcos want US tech giants to help fund network costs

BRUSSELS, Nov. 29 (Reuters) – US tech giants should bear some of the cost of developing European telecom networks because they use them so heavily, CEOs of Deutsche Telekom (DTEGn.DE), Vodafone (VOD.L) and 11 others large European telecom companies announced this on Monday.

The CEOs’ call comes as the telecom industry faces massive investments for 5G, fiber and cable networks to cope with data and cloud services provided by Netflix (NFLX.O) and Google’s (GOOGL.O) YouTube and Facebook (FB.O).

Investments in the European telecom sector rose to EUR 52.5 billion (USD 59.4 billion) last year, a six-year high.

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“A large and increasing amount of network traffic is generated and monetized by major technology platforms, but it requires continuous, intensive network investment and planning by the telecommunications industry,” the CEOs said in a joint statement from Reuters.

“This model – allowing EU citizens to enjoy the benefits of digital transformation – can only be sustainable if such large technology platforms also contribute fairly to network costs,” they said.

The CEOs didn’t name tech companies, but Reuters understands that US publicly traded giants like Netflix and Facebook are companies they have in mind.

Technicians work on top of transmitting antennas, seen on a cell phone relay mast in France, Lambres-lez-Douai, Sept. 30, 2020. REUTERS/Pascal Rossignol

Signatories of the letter include the CEOs of Telefonica (TEF.MC), Orange (ORAN.PA), KPN (KPN.AS), BT Group (BT.L), Telekom Austria (TELA.VI), Vivacom, Proximus (PROX .BR), Telenor (TEL.OL), Altice Portugal, Telia Company (TELIA.ST) and Swisscom (SCMN.S).

The CEOs also criticized high spectrum prices and auctions, which EU governments use like cash cows, saying they artificially force unsustainable new entrants into the market.

Efforts by EU lawmakers to abolish surcharges on intra-EU calls have also been met with short shrift by CEOs who see this sector as a source of revenue for business users.

“We estimate that they would forcibly remove more than $2 billion in revenue from the industry over a 4-year period, which is equivalent to 2.5% of the industry’s annual investment capacity for mobile infrastructure,” the companies said.

EU legislators must discuss their proposal with EU countries before it can be adopted and may struggle to reach agreement.

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Reporting by Foo Yun Chee; Editing by Toby Chopra

Our Standards: The Thomson Reuters Trust Principles.

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