EGDF stands against network fees

EGDF responded on the exploratory consultation on the future of the electronic communications sector and its infrastructure that discussed, among other things, the possibility of introducing a new telecommunication network access fee for digital businesses to finance internet service providers’ investment in telecommunication networks. 

A reliable high-speed internet connection plays a critical role in modern infrastructure.

As more public services are becoming accessible online, and sometimes exclusively so, it is imperative to ensure universal and non-discriminatory Internet access for both citizens and businesses. The pandemic demonstrated the importance of internet access in securing access to culture and made visible the essentiality of better internet infrastructure and unlimited data plans. The European Digital Single Market area can only become a global leader in innovations and secure digital growth and jobs if a high level of non-discriminatory connectivity is ensured throughout Europe. Rather than imposing network fees that create new barriers to market access, the Commission should concentrate on transforming the European Digital Single Market into a pioneering testbed for the next generation of mobile content and services.

EGDF does not see network fees as a solution:

  • Network fees are not a solution to the underlying market and policy failures at the member state level. The substantial disparities in the challenges related to telecommunication markets among EU member states highlight the absence of a systematic issue that the Commission can address with one-size-fits-all EU-level intervention. In regions where the competition between ISPs flourishes, there is no significant shortage of investment in network infrastructure, rendering network fees unnecessary. Instead, the European Commission should concentrate on supporting member states in addressing their unique national challenges and fostering improvements at the domestic level.
  • European game developers, publishers and platforms actively invest in telecommunication services, contrary to the claims often made by Internet Service Providers (ISPs). These content application providers invest in European telecommunication services such as Content Delivery Networks (CDNs) and data centres. Additionally, they invest in green game design solutions that minimise unnecessary network traffic.
  • The Commission’s plans to undermine network neutrality through network fees face constitutional and legal challenges within member states and present the potential for significant market access barriers for European content creators. Any relaxation of network neutrality through network fees poses a grave risk of dividing European digital single market area along national mobile and broadband networks. This scenario would easily grant (ISPs) the power to deliberately throttle the provision of digital services that compete with their own offerings or make them financially unsustainable. Consequently, this would create new barriers to access to culture and the free movement of innovative digital services and knowledge within the EU.
  • It is crucial to acknowledge that the demand for faster internet services is driven by cultural and artistic content rather than the other way around. Introducing network fees poses a significant risk of creating a destructive cycle. First, these fees would increase prices for digital content and services in Europe. Higher prices would reduce the demand for such digital offerings, subsequently diminishing the need for faster internet connections. As a result, network fees could potentially lead to a situation where the EU lags behind the global market in both the adoption of new and innovative data-intensive services and the quality of European internet infrastructure.
  • It is imperative to recognise that European consumers and small and medium-sized enterprises (SMEs) would bear the burden of network fees, despite arguments suggesting that these fees would target large multinational internet giants. In reality, these giants possess a market position that enables them to pass on the costs along the value chain, ultimately to European consumers and SMEs who rely on their services. Consequently, this would result in more expensive services for European consumers and impose new financial barriers for European SMEs seeking to access European digital single markets
  • Implementing network fees would potentially force game platforms to support their competitors financially. It is important to note that numerous European Internet Service Providers (ISPs) extend their services beyond telecommunication services and operate their own video-on-demand platforms or digital game distribution platforms. Consequently, network fees could result in a scenario where cultural content distribution platforms operating in Europe are forced to financially support their direct competitors, who also happen to be ISPs. This would pose a clear conflict of interest and can disrupt fair competition within the digital market. 
  • Network fees would reduce the pressure for investment in R&D and new business modes. If network fees were to cover the investment costs associated with telecommunication infrastructure, European telecommunication companies would lack the financial incentive to invest in groundbreaking R&D efforts and explore these transformative services.
  • Network fees must not undermine efforts to minimise European CO2 emissions. While the CO2 footprint of network technologies is a critical factor, it should always be considered within the broader context of the environmental footprint of the digital services that rely on the telecommunication network. Different use cases may necessitate different approaches to achieve environmental friendliness. For instance, in certain scenarios, performing computing tasks on the device level is more eco-friendly than relying solely on cloud-based solutions. In contrast, in other cases, cloud computing coupled with network delivery is the more environmentally sustainable option. The proposed network fees can create economic incentives that minimise the use of green cloud technologies. This may inadvertently increase the carbon footprint of games, contradicting the EU’s strategic goals of combatting climate change by reducing the carbon footprint of European industries.
  • The upcoming implementation of the OECD digital taxation framework holds the potential to provide more funding for EU member states to invest in their telecommunication infrastructure. Currently, OECD countries are making notable progress on the OECD Pillar 1 agreement, which aims to redistribute a considerable portion of the corporate tax revenue generated by multinational internet giants. This redistribution would redirect the tax revenue from the companies’ country of registration to the countries where their users are located. Should member states choose to do so, they can utilise this additional tax revenue to invest in strengthening their telecommunication networks.

To unleash the full potential of electronic communication infrastructure, the Commission must shift its focus away from network fees and instead prioritise the following crucial aspects:

  • Access to reliable internet infrastructure through healthy competition and public support. The Commission should focus on supporting its member states to overcome their unique national challenges. For instance, countries like Finland have successfully fostered healthy competition among telecommunication companies, resulting in reliable and affordable unlimited mobile and broadband data connections for all. At the same time, although high-speed internet connections are decisive for economic success, innovations, the transfer of knowledge and participation in society, some EU member states like Germany and Belgium are still lagging behind when it comes to comprehensive coverage, international standards and technical possibilities causing significant challenges for industry and consumers alike. 
  • Ensuring fast, affordable, and unlimited internet access for all: Europe is lagging behind other continents in deploying 5G networks. However, globally, the adoption of data-intensive mobile 5G services, such as cloud-based gaming, is hindered by data caps and exorbitant prices. Therefore, by pushing European telecommunication providers to offer unlimited mobile data plans to all, the Commission can make the European Digital Single Market a pioneering testbed for next-generation mobile content and services. This approach would provide a distinct advantage to European businesses. It is not a coincidence that the first commercial mobile cloud-based mobile game streaming services were introduced in Finland, where cheap unlimited mobile data plans are the norm.

Read the full statement form here:

You can access the full EGDF approach on digital growth friendly telecommunication infrastructure from here: