Fair Share: No, Gafa alone is not responsible

This is the telecom and digital debate of the year. Will operators in Europe manage to ‘pay’ Netflix and others for excessive bandwidth usage? If the telcos are to be believed, there is urgency. According to sector regulator Arcep, more than half (51%) of internet traffic in France in 2021 came from 5 players: Netflix, Google, host Akamai, Facebook and Amazon. Faced with this, operators have no choice but to invest more in their infrastructure. In total, the weight of the platforms alone could force European operators to spend an additional €36-40 billion annually, Frontier said.

In this context, telcos require a fair financial contribution (“Fair Share”) and new obligations from content providers. For example, prohibit automatic linking of videos or less energy-intensive encoding methods. Operators have already won the first point in this battle. The European Commission is preparing to hold a public consultation on the subject. Up ahead, the Qafams are polishing their weapons. Privately, some go so far as to threaten to downgrade videos, which calls Net neutrality into question. Protected by European law since 2015, this principle means that all content is accessible to everyone, regardless of the internet service provider.

Triple fail

The argument is perfectly legitimate. “There’s real content, especially on mobile. Part of the accommodation and energy costs directly depends on the traffic. Video platforms take advantage of the situation and create negative externalities,” says Joëlle Toledano, professor emeritus at Paris-Dauphine PSL University and member of the National Digital Council. But it would be unfair and inaccurate to blame Ghafam alone. Like Internet users, telecom operators have a share of responsibility. The requirement that platforms pay, in a vacuum, underscores a triple whammy.

Faced with American or Chinese giants, European operators initially failed to become content champions. Last week’s sale of OCS to Canal+, with the loss of Orange’s channel and series package, is a convincing example. Altice, which even bet on the convergence of the famous “telecom media”, retreated, left the paper press (“Liberation” and “L’Express” were both sold) and reduced its wings in sports. On the contrary, platforms, on the contrary, break all barriers. For example, YouTube has just acquired the prestigious rights to American football’s Sunday Ticket in the United States. Investment amount: more than 2 billion dollars per year for seven years.

Information highways

It seemed attractive to offer more services in return for more expensive packages. In telecommunications jargon, this is called “more for more”. The problem is that operators have not been able to raise prices, especially in France. This is their second failure. According to the firm Arthur D. Little, since 2012, the price of telecommunications services in France has fallen by about 2% per year. So much so that a fixed triple play package (fiber, TV and phone internet) is currently €31 in France, €45 in Germany and even €110 in the US.

However, operators also offered packages that were richer in terms of data. Although the French consume an average of 14.3 gigabytes of data per month, according to Arcep, the market is full of packages offering 100, 200 and even 240 gigabytes! Very generous envelopes even expect monthly consumption to reach 50 gigabytes by 2030. Therefore, by expanding digital highways, operators have accompanied the traffic explosion that they now want to pay Gafam for.

The battle of the big bucks

Faced with this difficult equation, many operators tried to regain value in the markets by selling their valuable fixed and mobile infrastructure to become simple “tenants”. In France, they sold a part of Orange, SFR, Bouygues and Free networks. With this, the operators exposed themselves to Ghafam, who themselves do the opposite. Google mischievously mentions the $24-30 billion invested in infrastructure each year. Facebook is partially funding the world’s longest submarine cable. The third mistake!

As 2023 begins, the Fair Share debate should be an opportunity to address structural challenges in the sector, such as the lack of consolidation in telecoms across Europe. “Before you can offer a solution, you have to make a diagnosis. There, telecommunications do the opposite,” laments Joëlle Toledano. Without this work, the idea of ​​a financial contribution risks looking like a simple defensive maneuver, even vindictive. Or worse, as a big money battle between telecom and internet billionaires.