Fair Share Contribution (aka Internet Traffic Tax) revisited - Big Telco vs. Big Tech

There are some problems with Big Telco's (ISPs) reasoning claiming that Big Tech (CAPs) should contribute their 'fair share' of broadband investments.

1. Net Neutrality

Applying the Internet Traffic Tax (ITT) to Big Tech only would violate Net Neutrality, meaning: it would create barriers to entry and growth for smaller and new CAPs, as Analysys Mason argues (and goes on to state that CAPs could have reduced incentives to invest in infrastructure, which would increase costs for ISPs, risk reduced quality of internet access, reduced ISP competition and ultimately higher fees for end-users).

By the way: what if the most popular services were not clustered at a handfull Big Tech companies, but instead were widely spread over hundreds or even more companies? What would the ITT then look like?

2. Fair is fair

Co-investment would necessarily lead to Big Tech taking an equity stake in a series of infrastructure joint-ventures with Big Telco.

Unless it would indeed be a tax, from which a European Broadband Fund would be funded, but that would alter the Big Telco proposal entirely.

Conversely, if Big Tech should share in the cost of access networks, then Big Telco should share in the cost of developing services and content.

Indeed, the EU appears to be signalling that the cost of for instance the metaverse and the cloud (incl. subsea cable systems and datacenters) should be considered - areas where Big Tech's investments dwarf those of Big Telco.

3. If it ain't broke, don't fix it

Increased data traffic leads to increased network costs and investments. This is a natural consequence of Big Tech services leading to the creation of the (large, growing and very profitable) Broadband Market in the first place. However, over the past few years Big Telco margins have only expanded, as the cost per bit has been coming down.

Peering and local caching (such as Netflix's free Open Connect CDN) only help towards this. The system, based on good old market forces, works fine. Some, such as DT and SKT, resist Open Connect, leading to more expensive transit (in the case of SKT: to Hong Kong and Tokyo), deteriorating the user experience.

4. Two-sided business model

Big Telco can't be forced to adopt a network vision including peering, local caching, transport (incl. subsea) and hosting (datacenters) and appears to be more interested in creating a two-sided business model based on Sending Party Network Pays (SPNP), as ETNO proposes (and BEREC opposed). Even if the former (peering and caching) provides Big Telco with large savings, as Analysys Mason shows. SPNP carries the risk of giving Big Telco monopoly power in termination, as Euro-IX argues.

Big Telco owns the billing relation with the end-user. If it has insufficient pricing power to raise prices, then this implies that not all Telcos agree with Big Telco's argument. Also, why not switch from unmetered to metered (volume-based) tiers? And remeber: manufacturers of electronic products never contributed to the cost of the electricity grid.