Internet data growth has not pushed up telcos’ network costs, Dutch government says

Internet data growth has not pushed up telcos’ network costs, Dutch government says

By Foo Yun Chee

BRUSSELS (Reuters) – The Dutch government has stepped up its criticism of a push by EU telecoms operators to get Big Tech to help pay for the rollout of 5G and broadband, saying claims that unchecked data growth has pushed up network costs are not backed by facts.

Instead of a one-size-fits-all approach such as a network fee levied on video streaming companies, it would be better to have a toolbox with different instruments targeting specific issues in different EU countries, it said.

The comments were set out in a position paper shared with the European Commission and EU countries ahead of a meeting of EU telecoms ministers in Luxembourg on Friday.

“In reality, contrary to all these persistent claims, the strong growth of Internet data in the past did not confront large telecom operators with higher network costs,” the paper seen by Reuters said.

“This is because network equipment becomes ever more powerful at the same price. By omitting this crucial insight, a problem is suggested that does not exist.”

The issue pits Deutsche Telekom, Orange, Telefonica and Telecom Italia against Alphabet Inc’s Google, Apple Inc, Meta Platforms Inc, Netflix Inc, Amazon.com Inc and Microsoft Corp.

“In reality the total network costs have remained constant despite the consistently high growth over the last decades, whilst the profit margins of European telecom operators have improved significantly over the last decade,” the paper said.

“Protecting large telecom operators should not be a goal in itself, as the interests of European consumers and businesses should be leading,” the Dutch said, citing the 188 billion euros in the combined revenue of large EU telecoms providers in 2021 versus Netflix’s 9 billion euros in annual revenue.

They said direct payments are unjustified as end-users already pay for their access line including network traffic costs while such intervention would affect the functioning of the internet.

The Dutch also slammed calls to antitrust regulators to loosen merger rules to allow the creation of very large pan-European telecommunications champions.

“The synergies for such cross-border mergers to telecom operators are generally considered relatively limited, whilst there don’t seem to be convincing benefits to wider society.”

(Reporting by Foo Yun Chee; Editing by Chizu Nomiyama)