EC’s fair share ruling is MIA

• The European Commission has provided an update on its wide-ranging networking sector consultation
• Investments, single market levers and security are all included in the ‘main takeaways’ from the consultation
• But the issue of capex contributions from the big tech companies is absent from that list
• Reports suggest it’s unlikely any legislation proposal will be forthcoming on the ‘fair share’ issue until 2025

European telcos hoping to see an initial ruling on so-called fair share capex contributions from the big tech firms in the coming weeks or months look set to be disappointed after the European Commission (EC) provided an update on its communications network sector consultation that omitted any mention of such contributions, and Reuters reported that any fair share ruling from the EC might not be forthcoming until 2025. 

The region’s telcos have been piling pressure on the EC to force the likes of Amazon, Google and Meta, dubbed the large traffic generators (LTGs), to make contributions to telco capex budgets – see Euro telcos pile on fair share pressure.

Without such ‘fair’ contributions, Europe’s telcos will be unable to make the appropriate investments in the regional digital communications infrastructure, they argue. 

The telcos were given a glimmer of hope that some kind of ruling on the issue might be forthcoming when the EC included the fair share issue in the consultation it launched in February this year – see Big tech slams European Commission as capex consultation begins.

But that hope might be dimmed following the publication by the commission of the ‘Results of the exploratory consultation on the future of the electronic communications sector and its infrastructure’. 

The EC offered up three main takeaways from the results, namely: We need innovation and efficient investment; we need to leverage the single market to boost investment and innovation; and we need to secure our networks. You can see exactly what the EC has to say about each of these right here.

The focus on investment is, of course, critical: The ongoing narrative is that even with public funding, the European Union’s member states might not reach the digital infrastructure targets for high-speed broadband connectivity by the end of this decade. Hence the increasing urgency from the telcos about the need for contributions from the big tech firms towards their infrastructure investment costs: Data and video traffic volumes are rising and putting pressure on networks, but the telcos aren’t seeing meaningful returns from their investments. 

But the EC’s takeaways, while heavily focused on investment, didn’t mention the issue of contributions from the big tech players, though the issue features significantly in the full detailed report on which the takeaways are based: That full report is available to download from this EC website page.

The issue wasn’t even addressed head on by European Commissioner Thierry Breton, who kickstarted the consultation, in a blog he posted on LinkedIn. Instead he referenced the fair share situation only in passing. He noted: 

“The first Report on the State of the Digital Decade shows that, at the current rate of investment and policy intervention, we will not reach our Digital Decade targets, let alone [make] the extra leap required by the ongoing technological shift. We should work together, industry, investors, public authorities, to uncover and remove the obstacles to much needed investments and make them more efficient. Some have tried to reduce the issue of investment to a battle over the “fair share” between big telco and big tech. A binary choice between the vested interests of those who provide networks today and those who currently feed them with the traffic. But while finding a financing model for the huge investments needed is an important issue that we will need to deal with, so much more is at stake. It is about achieving the giant leap ahead of us: not only in the telecoms sector, but more broadly in digital technologies.”

And as if the situation wasn’t already mired in proposals and consultations, Breton went on to suggest additional legislation in the form of a Digital Networks Act. “We have announced that Europe will do ‘whatever it takes’ to keep its competitive edge, and we are looking for concrete and ambitious recommendations on the future of the single market. Here is one: Work on a bold, future-oriented, game-changing ‘Digital Networks Act’ to redefine the DNA of our telecoms regulation. Getting it right will require vision, boldness and time, but we should start now taking concrete steps. The task will not be easy but – as we have done on other game-changing proposals – we will not shy away from doing what is needed to achieve a paradigm shift in digital regulation.”

As the DNA idea swirled around the EU, Reuters reported that an initial fair share ruling might be pushed back to 2025 and become the responsibility of the next set of European commissioners, though that delay, it noted, is not set in stone. 

In the meantime, Europe’s telcos are preparing to publish their third-quarter earnings reports that, in all likelihood, will point to squeezed margins and investments. The suggestion that fair share contributions might either be a very long way off or never happen will not improve their outlooks or share prices. 

- Ray Le Maistre, Editorial Director, TelecomTV