In a significant development, European telecom operators are seeking financial support from major tech corporations to aid in the rollout of 5G and broadband infrastructure. Industry leaders such as Deutsche Telekom, Orange, Telefonica, and Telecom Italia argue that tech giants like Google, Facebook, Netflix, Microsoft, and Amazon, contributing significantly to internet traffic, should bear a portion of the rollout costs. They refer to this funding mechanism as “fair-share funding,” while Big Tech perceives it as an “internet tax.”
After gathering feedback from European telecom operators and tech companies, EU industry chief Thierry Breton had previously hinted at potential legislation to address the investment gap of 200 billion euros ($212.4 billion). However, due to disagreements among EU commissioners and member states, Breton is now likely to outline a strategy next year, leaving the decision on legislation to the subsequent European Commission. Breton emphasized the need for a comprehensive approach to the telecoms market, suggesting a “Digital Networks Act” to redefine telecoms regulation and enhance competitiveness. He stressed the importance of overcoming regulatory barriers and moving towards a unified European telecoms market.
“Here is one: work on a bold, future-oriented, game-changing Digital Networks Act to redefine the DNA of our telecoms regulation. Getting it right will require vision, boldness and time, but we should start now taking concrete steps,” Breton said.
One of the concerns raised by Breton is the recent trend of sovereign investment funds and private equity firms acquiring stakes in European telecoms companies. This issue will likely be discussed during the upcoming meeting of EU telecoms ministers in Spain. The Spanish government’s scrutiny of Saudi Arabian group STC’s acquisition of a 9.9% stake in Telefonica, making it the largest shareholder, highlights the rising unease over foreign investment in critical telecommunications infrastructure.
While the exact direction of legislation remains uncertain, Breton’s emphasis on a forward-thinking approach suggests a proactive stance in leveraging technology to enhance Europe’s digital infrastructure and maintain a competitive edge. As the current European Commission’s term ends in November next year, the tech and telecom industries will keenly watch for further developments and potential regulatory frameworks to drive digital transformation.
