Europe’s Internet ecosystem: 72 billion increase in GDP and 840 thousand new jobs on hand if gaps in network costs, digital platforms and services are addressed

BRUSSELS, May 2, 2022 – Today’s tech giants are not contributing their fair share to the deployment of telecom networks, while generating network-related costs of tens of billions of euros. This impairs Europe’s ability to quickly achieve its connectivity goals. Addressing this through policy actions could unleash Europe’s social and economic benefits, including €72 billion GDP growth, 840,000 additional jobs in 2025 and reduced carbon dioxide emissions.

The results were published today in ReportEurope’s Internet ecosystem: the social and economic benefits of a fairer balance between tech giants and telecom operators‘, prepared by international consulting firm Axon Partners Group Consulting for the leading communications association ETNO.

Problem: Does everyone contribute their fair share?

Europe has area To achieve gigabit and 5G connectivity for all by 2030. The report shows that European telecom companies have invested more than 500 billion euros in fixed and mobile networks in the past ten years. On the contrary, the 6 largest technology giants generated more than 55% of the traffic of all telecom networks, but made “little or no financial contribution to the development of national networks”.

The report concludes that European telecoms companies are currently unable to recover these costs due to the asymmetric bargaining power favoring big technology as well as the lack of a level playing field: Internet traffic markets are fundamentally unbalanced. The report also refers to Newly disclosed data By consultancy Frontier Economics, which estimates that traffic led by the tech giants alone could generate network costs of at least 15 billion euros, if you consider the additional costs, or at least 36 billion euros, if you factor in the costs total.

Consequences: slower deployment of 5G/FTTH networks, suboptimal QoS, more CO2

The report shows that this imbalance has consequences. First, this contributes to making European telecoms weaker financially, impairing their ability to accelerate gigabit rollout: for example, the total market capitalization of the 8 largest telecoms companies in Europe is 0.24 trillion euros, against 7.11 trillion euros up. 6 giants in technology. Second, service quality and innovation can be improved through more investment. Finally, in the absence of meaningful contributions from the tech giants, the transition to greener networks is slower, with implications for CO2 emissions.

A fairer ecosystem: €72 billion GDP growth with positive social and environmental impacts

Axon estimates that, taking into account an illustrative annual contribution of €20 billion to network costs by tech giants, the European Internet ecosystem could open up significant opportunities. Up to 72 billion euros could be added to the GDP and 840 thousand jobs could be created in 2025. Similarly, energy consumption in this sector could be reduced by 28% and the carbon footprint could be reduced by up to 94%.

Possible Solutions: Regulatory Action to Address Unbalanced IP Markets

Urgent and targeted regulatory action is required to address critical imbalances in Internet traffic markets and unlock social and economic opportunities for citizens and businesses. This should be done within the framework of the principles of the Open Internet in Europe, while ensuring that all consumers continue to benefit from the full range of access and quality of the ever-evolving network.

According to the report, solutions can be based on making a clear commitment to negotiate with ISPs. This will help ensure fair trade negotiations with the big tech companies, who currently have asymmetric negotiating power. Actions will be in keeping with the spirit of the newly created Digital Markets Act, building on principles found in existing EU frameworks such as: Electronic Communications Law, the Broadband Cost Reduction Directive, and dispute resolution mechanisms (such as the ADR in the Copyright Directive or in the EU Approach on basic patents).

Comments by ETNO and Axon

Lise Ver, ETNO’s Managing Director, said:The European Union is determined to address the power imbalances in the Internet and technology. With today’s report, we want to launch an open dialogue with policy makers, consumers and technology companies about how to address identified imbalances in internet traffic markets. This is not a technical issue: it is about our ability to put Europe at the forefront of the global 5G and FTTH race“.

Alphonse Oliver, Partner at Axon said:The The European Commission recently recognized the need to develop appropriate frameworks for technology companies to contribute their fair share in the development of telecommunications infrastructure. Now is the time for EU legislators to make this happen, and to unleash the important benefits this will bring to the European community.”.


The report is available at this link.