Telekom: Big Tech’s cost share is the CO₂ tax for the Internet

Telekom: Big Tech’s cost share is the CO₂ tax for the Internet

The EU Commission is toying with introducing an infrastructure levy for large platform operators such as Amazon, Apple, Google, Meta, Microsoft and Netflix in order to help finance network expansion by European network operators.

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Such a step is essential, warned Jakob Greiner, Head of European Affairs at Deutsche Telekom, on Thursday during a debate at the Telefónica base camp in Berlin. The handful of content providers are responsible for over half of the data traffic in the group’s network and this is growing by 20 to 30 percent every year. A financial incentive to save traffic “such as a CO₂ tax” is therefore necessary – also for reasons of energy efficiency.

Investments don’t pay off

With such an approach, the platform operators would think twice about what they put into the networks and, if necessary, compress it more, explained Greiner. Up to now, operators have had to constantly expand their capacities at great expense and buy new spectrum for mobile communications, for example. Telekom alone invests 20 percent of its sales on this, which is significantly higher than the expenditure of its counterparts in China and the USA. However, this does not pay off, as the end user prices in the fixed network are at the same level compared to 2015 with data growth of 22 times, due to high competitive pressure, among other things, and mobile phone tariffs have even fallen by 17 percent at the same time.

The telecommunications sector is not doing well across the EU, complained the lobbyist. More and more private financial investors with high return expectations got involved. For many companies, the calculation no longer works, they are “extremely over-indebted” and have to sell radio towers. They also want to “look left and right” for additional business models, for example in the cloud. However, the funds required for this were used for the “bread and butter business”. The federal government and the EU’s targets to achieve gigabit for everyone in addition to 5G across the board by 2030 are likely to be difficult to achieve.

The providers in question already paid a small data toll, reported Greiner. However, this would not amount to more than 200 million euros for the entire telecommunications industry throughout Europe, which is not proportionate. In addition, prices are “significantly collapsing”. The telcos are therefore concerned with being able to “negotiate on an equal footing” and, if necessary, be able to initiate a dispute resolution procedure. The legally guaranteed network neutrality will not be affected.

Google is also investing in infrastructure

“We’ve been going around in circles for years,” replied Lutz Mache from the government and public relations department at Google to his first-name friend Greinert, accusing him of black and white thinking. In agreement with the federal government, he pointed out that Big Tech’s share of the costs would affect the entire Internet ecosystem. Many people contributed to this, including us. Google has spent over 80 billion euros on data centers, submarine cables and similar infrastructure in Europe alone in recent years. It is still unclear where the alleged investment gap exists.

If a user wants to access a YouTube video, the server is initially located at the company’s headquarters in San Bruno, California, Mache gave an example of how things work on the Internet. Telekom then receives the order to “supply this content to him”. They could do this very laboriously on site. However, those involved decided to use decentralized content delivery networks (CDNs), for which both sides paid. A network operator can still bypass these third parties and connect directly with Google via peering, for example. 99 percent of these data exchange agreements were made with a handshake, even if there are “always incentives” to reach different agreement rates.

In addition, Google also has an interest in optimizing services, the corporate lobbyist explained. For example, YouTube changed its video compression code so that there was 30 percent less traffic in 2019. There were just “panic calls” about why data traffic suddenly collapsed. Furthermore, there is also a common interest with Telekom, which has the authority to “cause traffic”, via the sovereign cloud solution for German industry. The intensity of use also weakened after the corona pandemic subsided; in Hungary, for example, growth was only 3 percent last year.

Less data waste

“The providers feel left alone to a certain extent,” said EU MP Andreas Schwab (CDU), showing his understanding for Telekom, Orange, Vodafone & Co. He did not want to speak directly about compensation payments, but called for a “commission to digital companies to deal with data waste “prevent”. There is still a lot of spam going through the lines at the moment. In some cases, colors are transmitted in videos “that no one can see.” His compromise proposal: The platform operators should voluntarily rely on “best practices” for data reduction and minimization. Legislators could possibly also set maximum traffic limits “which may not be exceeded”.

“We don’t see that we have an investment problem in Germany,” explained Maximilian Funke-Kaiser, digital policy spokesman for the FDP parliamentary group. “There is money for expanding the digital infrastructure.” The Liberals would therefore have placed an emphasis on framework conditions in order to get the financial resources and the associated lines into the ground more quickly. Approval procedures have been accelerated and alternative laying methods have been standardized. He accused Telekom of resting on its depreciated copper network for a long time and investing in fiber optics too late. Greiner countered that only vectoring was able to guarantee the required speeds during the pandemic. The fiber optic expansion would not have worked quickly.

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