By Dan Meyer | Executive Editor
Analysts remain unmoved by poverty claims from European telecommunications operators that want large tech companies like Facebook, Apple, and Twitter, and hyperscalers like Amazon Web Services (AWS), Microsoft, and Google, to pay a larger share of network investments.
Director of consumer and connectivity at CCS Insights, Kester Mann noted in a recent blog post that European-based telecom operators have continually voiced the need for those tech and cloud giants to help pay for their hundreds of billions of dollars they have spent to build the underlying networks. Mann specific cited comments made last month by industry trade groups GSMA and the European Telecommunications Network Operators’ Association (ETNO).
“The point of the message is that making vast upfront investments in mobile spectrum and network infrastructure is unfair and unsustainable without contributions from the small number of companies that account for the lion’s share of use,” Mann wrote. “Without support, it becomes much harder for providers to deliver high-capacity networks and narrow broad digital divides.”
A similar joint statement was made earlier this year by the CEOs of Vodafone, Telefónica, Deutsche Telekom, and Orange.
“The current situation is simply not sustainable. The investment burden must be shared in a more proportionate way,” the executives wrote in a joint statement. “Today, video streaming, gaming, and social media originated by a few digital content platforms accounts for over 70 per cent of all traffic running over the networks.”
Mann’s blog post included a chart that showed Google, Facebook, Netflix, Apple, Amazon, and Microsoft were the largest named generators of global network traffic last year, accounting for nearly 57 per cent of total traffic.
Who has More Value?
However, Mann countered that the content provided by these tech giants actually provide value to the underlying networks.
“I’m unconvinced about whether forcing big tech to invest in networks is even justified,” Mann wrote. “Without content, operators’ services become far less relevant — that’s why many have chosen to pall [sic] up with the likes of Netflix and Amazon to sell customers higher-priced bundles. In many ways, operators’ very existence depends on successful partnerships with the companies they’re now trying to penalize.”
And a counterargument was made that these telecom giants will become more reliant on tech giants to help them streamline their business operations.
“Amazon splurged US$65 billion on capital expenditure in the 12 months up to June 2022. It said that about half of this was allocated to Amazon Web Services, the company’s cloud and IT unit,” Mann noted. “Many operators are desperate to partner with the business to reduce their IT costs and foster new opportunities with 5G in enterprise. Google and Microsoft are also investing significantly in cloud services, and network providers will be among the major beneficiaries.”
Mann concluded that the operator claims could just aimed at getting regulators more on their side when it comes to future technology rules that will re-shape the technology landscape.
“And if that’s the real aim, it might just work,” he added.
