European Fight Over OTT Fees for Network Usage Ramps Up
The feud over whether content providers should pay for use of telco networks ratcheted up after Deutsche Telekom (DT) sued Meta for compensation and European internet exchange points urged the European Commission not to regulate fees. The two sides published dueling reports last year, and the EC promised to launch a consultation on the matter (see 2210130001).
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
The lawsuit, filed in Bonn, Germany, is set for hearing Jan. 25, a court official told us. Among other things, a DT subsidiary is seeking 12 million euros ($12.7 million) "at the moment." One item is "whether a contract has been concluded" between the parties. Meta didn't comment.
Meanwhile, the European Internet Exchange Association (Euro-IX) warned the EC that potential rules proposed by telcos in the "fair share" debate could raise the costs of concluding interconnection agreements; inhibit networks' choice to peer; and reduce interconnection density and quality of service to end-users. Also, they wrote in a Jan. 3 letter, it could "replace the current market-based model for interconnection with a highly regulated interconnection market in which administrative rules rather than technical necessity or a high-quality internet for the European citizens becomes the primary determinant of interconnection decision." Moreover, such a regime could "accidentally create new systemic weaknesses in critical infrastructure."
The proposal by some major European telcos seeks to capture value from global content networks by letting network operators set fees on content providers for access to their end-users, Euro-IX wrote. Telcos justify the claim that shifting value to network operators would allow them to boost their investment in network infrastructure, but the Body of European Regulators for Electronic Communications believes the "model would simply lead to large players exploiting the last-mile telecom bottleneck to increase monopoly profits."
Whether over-the-top players should pay for their use of bandwidth is a complicated political question from a policy standpoint, but telcos can legally ask Meta and other companies to pay because the matter is unregulated, emailed telecom consultant Innocenzo Genna. Network operators can and do make commercial agreements with OTTs for free carriage "because it's in their mutual interest." Under some commercial conditions, operators can charge for OTT transport, such as when a small telco carrying the same amount of traffic as larger players has a traffic imbalance and wants to be paid, he said: "The normal rule is free settlements so traffic flows rapidly and without obstacles."
Major European network operators want a general rule to force OTTs to pay, and the German lawsuit is a way to create a precedent, Genna said. DT "is trying to use the case to call for regulation, to show there's a competition problem that must be addressed with regulation. This is incremental to the general debate over use of the networks by OTTs."
"Some characterize this as an anti-US effort," emailed Strand Consult Senior Vice President Roslyn Layton: "I don't see that at all." U.S. broadband providers "are also upset with Big Tech," she noted, citing the Funding Affordable Internet With Reliable Contributions Act (S-2427) filed in the last Congress. It would require the FCC to study the feasibility of funding the USF via contributions by edge providers.