International Tax Panorama

Google, Netflix, Meta, Apple, Amazon and Microsoft generate nearly half of all internet traffic today. 

Telecom group think these firms should pay “fair share” fees to account for their disproportionate infrastructure needs and help fund the rollout of next-generation 5G and fiber networks.

That’s why Telecom groups are ramping up pressure on EU regulators to consider a framework where the companies that send traffic over their networks are charged fees to fund infrastructure upgrades. A two-sided model is being proposed, where the customer pays the operator, but also the content provider pays the operator” 

European Commissions’ Approach

The European Commission, the EU’s executive arm, opened a consultation last month examining how to address the imbalance. Officials are seeking views on whether to require a direct contribution from internet giants to the telco operators.

Resistance from Tech giants

Efforts to implement network fees have been met with disapproval from tech giants such as Netflix, who view the suggestion of direct compensation to telcos as an internet traffic “tax.”

Big Tech firms say this would amount to an “internet tax” that could undermine net neutrality. Technology firms worry that those who pay more for infrastructure may get better network access.

Speaking on Feb. 28 at MWC, Netflix co-CEO Greg Peters labeled proposals to make tech firms pay internet service providers for network costs an internet traffic “tax,” which would have an “adverse effect” on consumers.

Tech firms say that carriers already receive money to invest in infrastructure from their customers — who pay them via call, text and data fees — and that, by asking internet companies to pay for carriage, they effectively want to get paid twice.

Consumers may end up absorbing costs asked of digital content platforms, and this could ultimately “have a negative impact on consumers, especially at a time of price increases,” Matt Brittin, Google’s head of EMEA, said in September.

Tech firms also argue that they are already making large investments in European telco infrastructure, including subsea cables and server farms.

Rethinking ‘net neutrality’

The “fair share” debate has sparked some concern that the principles of net neutrality — which say the internet should be free, open, and not give priority to any one service — could be undermined. Telcos insist they’re not trying to erode net neutrality.

Google’s Brittin said that fair share payments “could potentially translate into measures that effectively discriminate between different types of traffic and infringe the rights of end users.”

Short-term solution

Carriers gripe that their networks are congested by a huge output from tech giants. One solution is to stagger content delivery at different times to ease the burden on network traffic.

Digital content providers could time a new blockbuster movie or game releases more efficiently, or compress the data delivered to ease the pressure off networks.