Deutsche Telekom demands: Large tech companies should pay for networks

René Resch

Deutsche Telekom renews its demand that major internet services such as Google, Apple, Facebook, Amazon, Microsoft or Netflix should pay for bandwidth usage. The company substantiated this with the help of studies in a blog post.

Sales of tech companies are increasing, while those of network operators are decreasing

A study by Frontier Economics, which was carried out for Deutsche Telekom, Orange, Telefónica and Vodafone, comes to the conclusion that the “traffic-related network costs” amount to around 36 to 40 billion euros per year. That means around 40 to 47 euros per customer on average in the fixed network and between 43 and 46 euros in mobile communications. It is emphasized here that the costs for the network expansion and other operating costs were not included here.

Also included is a study by Axon, which analyzes an “existing imbalance in the interaction between Internet and telecommunications companies”. The study finds that the six largest internet companies Google, Facebook, Netflix, Apple, Amazon and Microsoft alone account for more than half of the data traffic on the internet. In addition, the market capitalization of these companies is around 30 times higher than that of the eight largest European telecommunications companies. And while companies like Amazon, Alphabet (Google), Meta (Facebook) and Netflix have increased their sales by around 500 percent since 2015, those of telecom companies in Europe have fallen by 7 percent.

When the big tech companies pay, everyone benefits

The telecommunications companies are no longer able to negotiate fair commercial conditions for the use of their own networks with the large Internet platforms. According to the study, the lack of burden sharing has massive disadvantages for the EU telecommunications market. Exploding data traffic, high costs for expansion and falling sales mean that expansion, innovation, climate protection and service quality suffer.

The Axon study calculated scenarios in which the European network operators would receive 10 to 30 billion euros per year from the large tech companies. And that would pay off for everyone: the grid expansion would be accelerated, economic output would be massively increased, new jobs could be created, the network experience and innovations would be promoted, and energy consumption and CO₂ emissions would be significantly reduced.

Deutsche Telekom sees a need for action

Telekom is therefore calling for a balanced framework to be created with negotiations on an equal footing between telecommunications companies and tech companies. Deutsche Telekom calls on the EU to take action.

Whether such demands by network operators are justified has been hotly debated for years. For example, high-priced data tariffs with fast Internet are only interesting because of data-intensive services such as those of the streaming platforms – without these services, the fast lines would therefore be much less interesting. And net neutrality could also be affected, because if the big tech companies paid for access to the network, it could lead to a two-tier network that nobody wants – hopefully.

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