|Contact: Kasper Peters
|Contact: Nicolle Raven
13 October 2022
Network Usage Fees: Tech’s Infrastructure Investments Deliver Major Savings for EU Telcos, New Study Finds
Brussels, BELGIUM – Tech firms invest €22 billion per year in Europe’s internet infrastructure, which generates nearly €1 billion in annual savings for internet providers such as EU telecom operators, according to a new study presented in Brussels today.
The Analysys Mason report provides an evidence-based perspective to recent calls by EU telecom operators for the introduction of network usage fees, which leading content and application providers (CAPs) would have to pay telcos in order to reach end users.
Sharing his findings with reporters today, the study’s lead author David Abecassis underlined that “arguments made in favour of network usage fees do not stand up to scrutiny.”
Rebutting recent claims by EU telcos, the report demonstrates that tech firms spent €183 billion on infrastructure for Europe between 2011 and 2021 – above and beyond their investments in exciting content and applications. CAPs now invest €22 billion annually in EU digital infrastructure, an increase of 35% compared to the previous period.
In order to bring online content and applications closer to end users in Europe, tech continues to invest massively in delivery (i.e. peering and caching), transport (e.g. subsea cables) and hosting (e.g. local data centres). This does not only improve the delivery of CAPs’ own services, but also benefits internet service providers (ISPs), the authors stress.
Indeed, tech’s infrastructure spending saves Europe’s big telecom operators and other ISPs about €950 million per year in network and transit fees according to Analysys Mason.
When calling for EU network usage fees, these telecom operators consistently claim that traffic growth is an unsustainable burden, which requires other parties to pay for their infrastructure. Yet, the new study finds that the contrary is true.
From 2018 to 2021 network-related costs for ISPs increased by only 3%, even though global network traffic increased by over 160%. This just goes to show that EU telecom operators are perfectly able to handle steady traffic growth at almost negligible incremental cost.
Proponents of a traffic tax, Abecassis said, “tend to inflate the impact of traffic delivery on network costs. Costs have remained stable even as traffic has grown significantly.”
If an internet traffic tax becomes reality, it is extremely unlikely that those fees would actually lead to EU telcos investing more in networks. “Instead, already large and vertically integrated ISPs would likely enjoy higher profits and shareholder returns at the expense of end users,” the authors warn.
Today’s presentation of the Analysys Mason study ‘The impact of tech companies’ network investment on the economics of broadband ISPs’ was co-hosted by the Computer & Communications Industry Association (CCIA Europe) and DOT Europe.
The following can be attributed to Senior Vice President and Head of CCIA Europe, Christian Borggreen:
“This report refutes telcos’ claims by demonstrating the massive investments tech companies are making in internet infrastructure in Europe.”
“The costs of potential network usage fees would ultimately end up hitting Europeans directly in their pockets, in the form of more expensive cloud and streaming services.”
The following can be attributed to DOT Europe’s Director General, Siada El Ramly:
“This report quantifies the enormous infrastructure investments our industry is making, resulting in large downstream benefits for European society, such as accelerated GDP growth and job creation.”
“The traffic-related fees called for by EU telcos have no sustainable basis. On the contrary, this new study shows data traffic only drives a small share of ISP costs.”
“Mandated network usage fees will only reinforce the position of incumbent telco providers while disrupting innovation and competition to the detriment of European users.”
Notes for editors
- The infographic with key findings for Europe can be downloaded here.
- The full Analyses Mason study ‘The impact of tech companies’ network investment on the economics of broadband ISPs’ is now available.
- CCIA is an international, not-for-profit association representing a broad cross section of computer, communications and Internet industry firms. CCIA remains dedicated, as it has for 50 years, to promoting innovation and preserving full, fair and open competition throughout our industry. Our members employ more than 1.6 million workers.
- For more, please go to: ccianet.org
About DOT Europe
- DOT Europe is the voice of the leading internet companies in Europe. DOT Europe’s mission is to develop ideas and support policy initiatives that foster an innovative, open and safe internet for Europe’s citizens and businesses.
- More information is available here: https://doteurope.eu/