Summary Bullets:

• Telecommunications companies want webscale providers to contribute toward their data-intensive services delivered via their network for further infrastructure investment. Content providers argue about net neutrality.
• While there is no silver bullet to fix this global issue, content providers could look to store their content locally and strategically partner with a telco.

The time has come for telecommunications companies and webscale providers like Amazon, Netflix, YouTube, and Meta to settle the bill, but are they going to split the bill, or will telcos be made to pay the bill yet again? Telcos have been dissatisfied that they are paying for big techs’ lunch. Should big tech get their hands out of their pockets and look to contribute toward their data-hungry internet services? As the data traffic continues to surge and telco revenues continue to slide, telecom executives are applying pressure on the regulators to force these big techs to pay for their share of the network infrastructure.

It’s becoming more and more common that telecommunications companies are voicing their concerns about internet-based content players and how they are not pulling their weight when it comes to network infrastructure, as seen recently with Deutsche Telekom and Meta. In this instance, Meta terminated its direct peering relationship with Deutsche Telekom. Meta previously had an agreement with the carrier to send data traffic on the Deutsche Telekom network for a negotiated price. However, Meta and Deutsche Telekom could not come to a mutual agreement about the new pricing construct moving forward. Deutsche Telekom took legal action against the social media giant for non-payment with the carrier winning its case. Meta has decided to route its data traffic via a transit provider to Deutsche Telekom’s network instead of the previous direct route. All eyes are on how this will play out, given there are similar cases like this across multiple countries and involving multiple companies. Content players are closely monitoring the implications since this could set a global precedent and undermine net neutrality. Since 2016, telecommunications companies in the European Union (EU) have been bound by the open internet access regulation. The open internet access architecture is ensuring all internet traffic is treated equally without discrimination, blocking, throttling, or prioritization. The Deutsche Telekom-Meta case has experts arguing that this violates Europe’s net neutrality law, which protects people’s right to use the applications of their choice; that right and is not limited to apps that have paid people’s internet service providers.

Outside the EU and across the pond in the US, as well as other countries, including South Africa and Australia, telecom execs are mixed in their thoughts on how to navigate this issue, with some aggressively chasing regulators to intervene, while others prefer commercially agreed upon arrangements with big tech companies. In the UK, the government introduced a digital services tax in 2020, which saw 2% on the revenues of search engines, social media services, and online marketplaces that derive value from UK users. While there is no silver bullet in solving this global issue, content providers might want to look at storing their content locally in partnership with telecommunications providers. Additionally, telecommunications providers can look to strategically partner with the content provider offering exclusive content deals, joint marketing initiatives for its customers.