EU Consultation on Electronic Communications Infrastructure
Our answers to two important questions for EU regulators.
On May 19, we submitted two responses to the European Commission’s request for consultation on the future of the electronic communications sector and its infrastructure. Below are the questions we answered, and the answers we submitted, which were to be no more than 1,000 characters.
Question 26: The current source for financing the universal service in electronic communications is public general budget and/or financing from providers of electronic communications networks and services. What should be in your view the appropriate way for financing the universal service in electronic communications in the next 10 years?
Public general budget (as currently).
Progressive taxation should fund universal service. This will minimize abuse. “[T]he ‘sending party network pays’ … model” would let ISPs “exploit the termination monopoly and … such a significant change could be of significant harm.” BEREC preliminary assessment of the underlying assumptions of payments from large CAPs to ISPs (2022).
In 2023, the European Commission found that “fair contribution to the costs of network infrastructure … could be implemented in a variety of ways other than the Sending Network Party Pays mechanism….” A fair cost assessment must include CAPs’ huge investments in hosting and connectivity: $883 billion in the last decade; $120 billion from 2018-2021. The impact of tech companies' network investment on the economics of broadband ISPs (2022). Thus, BEREC tentatively concluded, “everything is covered and paid for in the Internet value chain (from content providers to the CAUs).” An assessment of IP-interconnection in the context of Net Neutrality (2012).
Question 54: The European Declaration on Digital Rights and Principles states that all digital players benefiting from the digital transformation should contribute in a fair and proportionate manner to the costs of public goods, services and infrastructures to the benefit of all people living in the EU. Some stakeholders have suggested a mandatory mechanism of direct payments from CAPs/LTGs to contribute to finance network deployment. Do you support such suggestion and if so why? If no, why not?
No.
“[B]oth sides of the market—CAPs on the one hand and users of these applications on the other hand—already contribute to paying for Internet connectivity,” found BEREC’s comments on the ETNO proposal for ITU/WCIT (2012). Forcing CAPs to pay more for network deployment would effectively let ISPs double charge customers: to connect and again for content.
BEREC also found that CAPs didn’t “cause” traffic: “the request for the data flow usually stems not from the CAP but from the retail Internet access provider’s own customer (who ‘pulls’ content provided by the CAPs, and from whom the ISP is already deriving revenues).” During the COVID pandemic, user demand drove increased traffic. Not a new app, just a new use pattern. BEREC found “no evidence that operators’ network costs are already not fully covered and paid for in the Internet value chain (from CAPs at one end, to the end users, at the other).”