Will EU make Tech Giants pay Mobile Operators?
It's Google, Netflix, Amazon and team VS Vodafone, Deutsch Telekom, Telefonica and team
Its the first half of 2023 and the battleground is Europe.
It's Google, Netflix, Amazon(Prime Video) and team Streaming Giants
VS
Vodafone, Deutsch Telekom, Orange and team telco
The European Commission is back in the news challenging the dominance of Internet Giants. Both sides will promote their views at various tech media websites, so watch out so that you do not be easily persuaded to a single viewpoint prematurely.
The EU is currently investigating if Apps that create data traffic congestion ought to take a larger share of the costs of the infrastructure? They have to do this carefully, as it would be a kind of ‘Internet Data tax’ or ‘Congestion tax’ that can have large-scale implications, and is likely to be contested by affected parties.
And yes, the rest of the world, especially governments and regulators, are watching, including the Indian Government regulator, TRAI.1
Remember Net Neutrality, Zero Rating and Paid Prioritization?)
Philippines[Wikipedia]
Telecommunications providers do not follow net neutrality in the Philippines, the country which spends the most time on the Internet and Social Media per day.[82][83] Telcos offer data package promos that have turned the Philippines into a balkanized commercial splinternet by giving certain free zero-rated data allocations of branded corporate platform services like social media (Facebook, Instagram, Twitter, TikTok), video (YouTube, Netflix, HBO Go), gaming (Mobile Legends, Clash of Clans, PUBG, Call of Duty), shopping (Lazada, Zalora, Shopee), and communications (Zoom, Viber, WhatsApp) - thus steering subscribers towards using the telcos' preferred partnered services.[84][85][86]
In the mid-2010s, Philippine telcos came under fire from the Department of Justice for throttling the bandwidth of subscribers of unlimited data plans if the subscribers exceeded arbitrary data caps imposed by the telcos under a supposed "fair use policy" on their "unlimited" plans.[87]
This time its the tech giants who are being challenged for free-riding2.
With the top 10 tech giants taking up 50% of the local operators capacity, EU3 region Operators like Vodafone and Orange claim that the Giants who run a hugely profitable streaming business on top of their network, need to pay up more than what their users/consumers pay in internet bills.
Ever since Internet Giants took away a large share of consumer spend, giving no revenue share to network operators, there has been a major disagreement between the Internet Giants (Meta, then Facebook etc.) and telco connectivity providers (Operators like Vodafone) regarding fair compensation for the billions of dollars that Operators like Vodafone spend on ensuring that Internet reaches consumers.
I provide an analogy here. Its like a private road toll operator demanding higher toll charges from one company (like Amazon) for sending half the trucks on the road due to congestion and higher road maintenance.
With the top 10 tech giants taking up 50% of the local operators capacity, EU region Operators like Vodafone claim that the Giants who run a hugely profitable business need to pay up more than what their users/consumers pay in internet bills.
Previously, before the iPhone disruption, operators took a revenue share from every application provider and were compensated.
After App Stores appeared, Apple and Google took that business (called Value Added Services or VAS4) away from the Operators, creating the new term OTT5 that some of us are familiar with.
The EU Commission is to decide if its just the telcos complaining because they are ‘dumb pipes‘ jealous of the '‘OTT Apps’ who have captured the value, and become more valuable, or is there in fact some truth to their claim.
Telecom Regulatory Authority of India, TRAI's mission is to ensure that the interests of consumers are protected while ensuring growth of telecommunications, broadcasting and cable services.
Free-Riding: A free rider is someone who wants others to pay for a public good but plans to use the good themselves; if many people act as free riders, the public good may never be provided. Markets often have a difficult time producing public goods because free riders attempt to use the public good without paying for it.
European Union
Typical examples of value-added services include call related services such as call waiting, call forwarding, multi-party conferencing, voice mail, other services like email, Short Messaging Services (SMS), Multimedia Messaging Services (MMS) etc.