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'Bit Is a Bit'

Telcos Urge EU to Answer 'Daring Question' of OTT Payment for Network Use

Whether telcos have a fair shot at monetizing what happens on their networks is one of the "daring questions" the EU must ask as it looks to the future of European telecom, said Lise Fuhr, European Telecommunications Network Operators' Association's director-general, Tuesday at a hybrid Politico debate on the future of connectivity. Addressing the issue is crucial as virtualization and AI make networks smarter and empower many more parts of society, she said.

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The European Commission is consulting on the future of the e-communications sector and its infrastructure (see 2302230001). Asked whether the consultation is already biased in favor of telcos receiving payments from over-the-top, sometimes called fair share, players, Roberto Viola, director-general of the European Commission's communications networks, content and technology department, said no decision has been made and commenters are free to say what they wish. The words "fair share" don't appear in the text of the consultation, he said; the EC debate is about "fair contribution to society."

Operator Orange criticized the lack of a structured discussion on fair contributions. This isn't a financial issue but a question of whether there's a balance in who's doing what on Orange networks, said Deputy CEO-Europe Mari-Noelle Jego-Laveissiere. Seventy percent of data on Orange networks comes from big OTT players, she said. She seeks a fully transparent and accountable framework to ensure everyone benefits from new networks, services and technologies.

Meta had a different view. Asked whether the relationship between telcos and OTTs is unbalanced, Economic and Social Policy Director Phillip Malloch said, "a bit is a bit wherever it comes from." The idea of fairness or unfairness isn't relevant because telcos and OTTs are symbiotic partners in the online ecosystem. It's Meta's job to develop products and services consumers want, and networks' job to build the infrastructure.

A Body of European Regulators for Electronic Communications fair contribution study found preliminarily that the "sending party pays" system used in South Korea could harm the internet, said Chair Konstantinos Masselos (see 2210130001).

Net neutrality doesn't enter into this, Viola said in response to a question about why that wasn't included in the EC consultation. In EU law, net neutrality is about the broadband provider and end user on the last mile of the network, emailed Roslyn Layton, Aalborg University fellow. Conversely, cost recovery doesn't involve blocking, throttling or prioritization of end users but is about the relationship between the broadband provider and content provider for a separate set of services. "Recovering costs makes networks more accessible for end users, enabling the policy goal of promoting end-user rights of access to open networks," she said.

Two lawsuits could potentially sway the debate. One, filed in Bonn, Germany, by a subsidiary of Deutsche Telekom (DT) against Meta, seeks 12 million Euros ($12.7 million) in compensation (see 2212150001). The case was shifted to a specialized competition court in Cologne, a DT spokesperson emailed. An initial hearing is set for April 20, but the telco doesn't "expect a final judgment anytime soon."

The second case is Netflix v. SK Broadband. Over several years, "Netflix traffic exploded on SK Broadband's network 26-fold, causing tens of millions of dollars of cost increases," Strand Consult reported. The South Korean telco tried to negotiate with Netflix for cost recovery using the telecom regulator's mediation process, but the OTT sued, claiming it had no obligation to negotiate or pay for network use. The court rejected Netflix's arguments, and the OTT appealed. In the meantime, the National Assembly of South Korea enacted the so-called Netflix Law, which requires content providers with at least 1 million users and/or whose traffic accounts for 1% or more total traffic to pay a fee for network use.

In both cases, the court ruled the broadband provider can seek recovery of costs from the content provider, Layton noted. The South Korean court didn't specify an amount, leaving it instead to the parties, but the German court will specify the amount of recovery, she said: "This suggests the courts find credence in the notion that broadband providers do not have to provide their networks for free to content providers and that negotiation for network usage is allowed."