The Internet value chain is progressing, while telecom operators lag behind

As internet value chains continue to grow by 15% a year, a new report warns that market imbalances in yield between network operators and online service providers could threaten prospects of global growth in several sectors.

The report from the GSMA, an industry association representing the interests of mobile operators around the world, was released on Monday (May 16) amid talk of the need for telecom operators to have a viable return on investment.

Online services saw a 19% increase in revenue in 2020, while the return on investment in infrastructure for network operators was only 6-11%, according to the report. publication.

This is problematic, according to the report, because the telecom operators who manage the connectivity infrastructure should continue to invest to increase the capacity, coverage and speed of the networks, which connect Internet users to online services.

Last week, Thierry Breton, European Commissioner for the Internal Market, announced that the European Commission would make the major content platforms contribute to the cost of telecommunications networks. This initiative is based on the principle that market players who benefit from the digital transition should contribute fairly to infrastructure costs, for the benefit of all Europeans. The new legislation will be presented before the end of 2022.

“We welcome the growing recognition of this issue by policy makers and the rise of the internet-based economy across all sectors over the next decade”said José María Álvarez-Pallete, president of the GSMA.

Ensure that all segments of the internet infrastructure can earn a fair return “would support long-term investments, not just companies that have the biggest platforms and scale”concludes the GSMA report.

In 2021, the top six companies alone will generate more traffic than the entire world in 2018, according to a study made for ETNO.

However, Christian Borggreen, the vice-president of the tech trade association CCIA, said the Commission’s proposal would conflict with EU net neutrality rules. These rules ensure that access to content and services is non-discriminatory and that all traffic is treated equally.

“The idea of ​​charging for some online services, but not others, is by definition discriminatory”Borggreen said at a conference on the European internet ecosystem organized by ETNO on Monday (May 16).

Borggreen also pointed out that technology companies have already spent a lot of resources on network infrastructure, undersea cables and data centers. “And they are investing billions in innovative content and services, which is driving demand for telecommunications services”he added.

The real problem, he said, is that telecom companies are struggling to pass on the cost of their data usage to their own customers.

It remains to be seen how the European Commission will tackle the question of fair remuneration. According to Rita Wezenbeek, Connectivity Director at the Commission, the two main questions concern how to establish fairness criteria and find an appropriate approach.

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The Internet value chain is progressing, while telecom operators lag behind

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