GSMA and ETNO want Big Tech to pay for 5G network

The GSMA and ETNO — in a joint response to the European Commission consultation – have demanded that Big Tech should share cost of rolling out 5G networks.
Kazakhstan mobile networkBig Tech includes Meta Platforms, Google, Microsoft, Netflix, among others. GSMA and ETNO say big technology are generating revenue riding on the mobile networks on top telecom operators.

These associations emphasize that Europe is at a critical juncture. They assert that immediate policy changes are necessary to establish the right conditions for Europe to lead in connectivity and prevent further lagging behind global competitors.

Europe currently faces underinvestment in telecom networks and services, resulting in a substantial investment gap of approximately €174 billion according to estimates by the European Commission. The sector is experiencing overall declining or stagnant revenues, returns below the cost of capital, weak market valuations, and high levels of debt.

In comparison to China, Japan, and the United States, Europe had 38 mobile operating groups with over 500,000 customers in 2021. Similarly, Europe has more than 580 mobile virtual operators (MVNOs), while the United States, Canada, China, Japan, and South Korea collectively have fewer. These statistics demonstrate the pressing need for Europe to address its connectivity challenges.

European telecom companies invested €56.3 billion in 2021 to deploy advanced networks and services, benefiting over 500 million citizens. However, regulatory intervention is necessary to ensure that large traffic generators contribute fairly to network deployment. Such intervention would bring significant improvements to European users, economies, and societies as a whole.

The current relationship between telecom operators and large traffic generators is imbalanced, as a few multinational companies generate substantial network costs that telecom companies and their customers bear exclusively. This situation hampers investment in future networks, putting European citizens and businesses at a global disadvantage.

These circumstances pose a threat to Europe’s Open Strategic Autonomy and raise doubts about the EU’s aspirations for future connectivity leadership. In response, ETNO and the GSMA have put forth policy proposals to address these concerns and ensure that Europe remains at the forefront of 5G, fiber-to-the-home (FTTH), and new cloud technologies. These proposals aim to support the inclusive rollout of new networks and facilitate the crucial green-digital transition.

The associations’ response suggests the following policy changes in Europe:

Creating a genuine single market for telecommunications by simplifying regulations related to telecoms rules, spectrum policy, consumer protection, taxation, and harmonized security frameworks.

Encouraging in-market consolidation to foster a healthy European telecom market through increased scale.

Introducing a fair contribution mechanism that enables balanced negotiations between telecommunications companies and large traffic generators. Currently, these generators derive significant benefits from telecom investments while imposing a high cost burden through their traffic, exerting disproportionate power across markets.

Lise Fuhr, Director General of ETNO, emphasized the strategic importance of a robust telecom sector for Europe, as secure and innovative networks serve as the backbone of society. Fuhr called for a better balance between powerful tech giants and European telcos, along with improved market scale. She asserted that policy changes are necessary to achieve the EU Digital Decade targets and expedite the green transition.

John Giusti, Chief Regulatory Officer of the GSMA, stressed the need for Europe to look forward and move away from outdated regulatory models in order to regain digital leadership.