The Malta Independent 9 December 2023, Saturday
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Control of the internet

Sunday, 12 March 2023, 07:39 Last update: about 10 months ago

Philip Micallef

The accelerated increase in connectivity brings out again the clash of interests between the digital giants and the telecommunications operators.

The Mobile World Congress held last week in Barcelona witnessed  another episode of the conflict between digital giants and telecommunications operators. In the recent past issues arose around privacy, security, freedom and responsibility. The most recent clash pits the four main European operators (Telefónica, Deutsche Telekom, Vodafone and Orange) against the big technology companies (Google, Meta, Amazon, Netflix, Microsoft and now strongly emerging TikTok). This is a struggle between the two empires through which the information age develops, that of telecommunications infrastructures and that of monopolies or oligopolies of online advertising, social networks, audio-visual content and cloud services, which are the ones that dominate the majority of the use of networks. They are two symbiotic businesses in which one could not exist without the other, but where important regulatory asymmetries, competition, job creation and investments occur.


The telecommunications companies argue that the traffic of the big technology companies involves a specific cost of €15,000m per year. The four have launched a joint campaign in Brussels to regulate the financing of infrastructures, and the president of Telefónica and the GSMA, organiser of Mobile Congress José María Álvarez-Pallete, was appointed their spokesman in Barcelona. The complaint focuses on the fact that "digital platforms are benefiting from low-cost hyperscaling business models" while the operators take on the cost of infrastructure and maintenance. This is taking place against a backdrop of decreasing prices per unit of bandwidth, which is compromising profitability and the effort associated with the continuous improvement of their networks. Operators are calling for a fairer trade and regulatory framework before taking on the agenda of Europe's Digital Decade, which aims to connect 45 million Europeans to gigabit and 5G networks by 2030.

The digital giants consider, for their part, that their position is more symbiotic than parasitic, and that they already contribute enough to the development and maintenance of the European infrastructure, such as submarine cables (often in collaboration with telecommunications operators), direct access points to the cloud or their own content distribution networks. In any case, these investments are much lower than those made by operators especially if seen in terms of the business they generate. In addition these infrastructures are more oriented to improve the quality of the services content providers provide to their customers (which end up becoming a barrier to entry for other players) than to contribute to European technological sovereignty and national security. They also argue that their content and services encourage demand for broadband services, which operators charge without distributing anything back to them.

Both premises are correct, but it is difficult to favour the arguments of the digital giants when the services they offer in many cases have practically no competition, enjoy regulatory asymmetry with respect to telecommunications operators and force their users to renounce most of the rights that the European network guarantees them, starting with net neutrality.

Ing. Philip Micallef is a former executive chairman of the Malta Communications Authority and chief executive of the Bermuda Regulatory Authority

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