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Telco CEOs call for fairer funding for network infrastructure

The CEOs of Deutsche Telekom, Orange, Telefonica and Vodafone have called for EU legislators to ensure digital content platforms bear more of a share of network infrastructure costs.

Joanne TaaffeJoanne Taaffe
15 Feb 2022
Telco CEOs call for fairer funding for network infrastructure

Telco CEOs call for fairer funding for network infrastructure

The CEOs of Deutsche Telekom, Orange, Telefonica and Vodafone have called for EU legislators to ensure digital content platforms bear more of a share of network infrastructure costs.

In an open letter to the Financial Times, Timotheus Höttges, CEO of Deutsche Telekom, Stéphane Richard, outgoing chairman and CEO of Orange, José María Álvarez-Pallete, chairman and CEO of Telefónica, and Nick Read, CEO of Vodafone, state that a few digital content platforms account for more than 70 per cent of network traffic.

In 2021, just six companies – Google, Facebook, Netflix, Amazon, Microsoft and Apple – generated nearly 57% of all network traffic worldwide, according to a report by Sandvine, a network monitoring company.

ETNO reports that European telecom capital expenditure (Capex) attained €52.5bn in 2020, the highest level in four years. As a result, fiber-to-the-home (FTTH) now reaches 51.6% of European households, while 5G covered 62% of the population in 2021 – although only 7.4% of subscribers used 5G in 2021.

However, the four CEOs insist that “our retail markets are in perpetual decline in terms of profitability”. And they believe they cannot make a viable return on investment, given that “network operators are in no position to negotiate fair terms with these giant platforms due to their strong market positions, asymmetric bargaining power and the lack of a level regulatory playing field.”

Without regulatory intervention, Europe risks falling behind other regions of the world, according to the four CEOs, with customers paying the price in the form of a relatively poorer experience.

In particular, they point to South Korea, where a regulatory requirement for content platforms to contribute to network costs is under discussion. And the US, where they say policymakers are moving towards universal service funded by digital platforms.

In 2020, mobile average revenues per user (ARPU) was €14.4 in Europe, compared to €37.9 in the US and €25 in South Korea, according to ETNO, and capex per capita was €96.3 in Europe, €191.9 in the US and €115.4 in South Korea.