Supporters and opponents of the “fair share” telecommunications concept—i.e. forcing the likes of Netflix and Meta to pay telecommunications network operators for carrying their traffic—can agree on one thing: It’s dead in Europe, at least for now.
I wrote about the EU’s fair-share debate earlier this year, but here’s a quick recap. Extracting such fees from Big Tech is a long-standing dream of big telcos, but net neutrality—the principle that network operators must treat everyone’s traffic the same—kept it off the table for years. However, with anti–Big Tech protectionism being in vogue, and with telcos facing major network upgrade costs, and with EU digital chief Thierry Breton being a former telco CEO, the operators recently launched a big lobbying push to put “fair share” up for consideration again.
Breton obliged earlier this year, adding the subject to a public consultation about reforms to telecoms rules. For a while there, it looked like Europe might significantly change the commercial dynamics of the internet.
But on Tuesday, the European Commission published the results of Breton’s consultation, noting that pretty much the only respondents in favor of direct “fair share” payments were the big telcos—content providers, consumer organizations, content delivery networks, and citizens broadly rejected it, because of the threat to net neutrality and the potential for consumers to face higher prices and less content choice.
Breton then published a statement on LinkedIn, calling for a future “Digital Networks Act” that would “redefine the DNA of our telecoms regulation”—but as this Commission’s term ends in mid-2024 and the EU’s legislative process lasts years, that’s not appearing anytime soon. His post briefly referred to the “fair share” debate, but didn’t come to any conclusion more solid than: “Finding a financing model for the huge investments needed is an important issue that we will need to deal with.”
“Investors wanted presents under the Christmas tree; instead, they got a Christmas card,” complained John Strand—a prominent telecoms consultant and big fair-share fan—in a research note today. “From the point of view of shareholders, the European Commission says that shareholders should not expect good news for the European telecommunications companies until the next Commission. This means sell telecom shares now, place the money somewhere else, and start buying them again in 2025 should good news come from the European Commission.”
“Breton was not left with much option but to shelve the ‘fair share’ proposal considering its wavering support in Europe, especially from member states,” Konstantinos Komaitis, a prominent net-neutrality advocate and nonresident fellow at the Atlantic Council, told me today. (Indeed, the Italian government warned the Commission a couple months ago that the proposal was premature, lacked a data-driven basis, and could create “a vicious cycle of higher prices, lower demand, less choice, and less usage to the detriment of all market players and consumers.”)
However, Komaitis said the issue was “not dead in Europe and will certainly follow the incoming Commission.”
There’s another problem, too. As I wrote in March, the EU’s consideration of “fair share” was likely to prove globally influential. And as noted in a letter from civil-society organizations to the world’s governments yesterday (spearheaded by Komaitis), India and Brazil are now also considering the concept, because the EU did the same. “We ask policymakers and governments from around the world to stand against the imposition of direct or indirect payment obligations to the benefit of only a handful of telecommunication operators,” the civil-society letter read.
As Strand sees it, the European Commission’s consultation results are “a gift for telecom operators outside the EU which wish to further their already advanced efforts on broadband cost recovery,” as it “offers a valuable and statistically significant overview of the key stakeholders, the challenges, and solutions.”
“The future for fair share is brighter outside the EU,” he concluded. More news below.
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David Meyer
NEWSWORTHY
Tech tax progress. The OECD has finally codified the 2021 agreement among more than 130 countries to make the international taxation system more fitting for the era of Big Tech. As the Financial Times notes in its report, the current, century-old rules don’t give countries enough leeway to tax companies operating on their turf without a physical presence. If the treaty published yesterday gets enough signatures and ratifications, multinationals like Meta and Google will see more of their profits taxed where they are generated, raising as much as $32 billion a year.
Anti-AI pushback. The powerful Recording Industry Association of America has urged the U.S. government to add AI voice cloning to a list of piracy threats, though as The Verge reports, it identified only one entity (Voicify.AI) that it claims is infringing “copyright as well as infringing the sound recording artist’s right to publicity.” Meanwhile, TechCrunch reports that fan-fiction writers are locking their accounts on the Archive of Our Own (AO3) platform, to stop their writing being used as AI training fodder. And outside the creative sphere, Reuters reports the U.S. Space Force has banned its workers from using AI tools on their work computers, owing to data security concerns.
Intel’s foundry challenge. Bloomberg reports on the challenges facing Intel CEO Pat Gelsinger’s plan to make the company a major contract manufacturer of other firms’ chips. The big one is Intel’s failure thus far to attract a big customer. “We’re starting to land some of our foundry customers right now,” Gelsinger told the publication, but he also conceded that “we fully realize that we have to earn our way into this business.”
SIGNIFICANT FIGURES
$100 billion
—The revenue potential of Amazon’s expansion into logistics services, per Truist Securities analyst Youssef Squali
IN CASE YOU MISSED IT
This TikTok feature is allowing users to pay to spread misinformation around Israel and Palestine, by Alexandra Sternlicht
Elon Musk demanded evidence of X spreading ‘fake content’ on Hamas attacks—now CEO Linda Yaccarino tells Brussels X is working ‘around the clock’ to tackle disinformation, by Christiaan Hetzner
Google is ditching passwords and making passkeys the default option, by Chris Morris
Microsoft owes an astounding $28.9 billion in back taxes, IRS says after audit of the company’s use of tax havens, by Associated Press
BEFORE YOU GO
Internet governance controversy. The Internet Governance Forum, a talking shop for governments and other stakeholders to discuss policy around running the network of networks, is going to hold its next big annual meeting in Saudi Arabia.
As Wired reports, human rights activists find this outrageous given the kingdom’s awful record on online (and offline) freedoms. But it gets worse—the 2025 IGF shindig is likely to take place in…Russia.
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