Proposed EU 'traffic tax' on big tech challenged

EU proposals that tech giants should contribute to the cost of telecommunications infrastructure opposed by internet exchange body and net neutrality advocates

The European Internet Exchange Association (Euro-IX), a group representing internet exchange points (IXPs) across Europe, has rejected the European Union's plan to require Big Tech firms to pay for telecom operators' network costs, stating that it could lead to systemic weakness in critical infrastructure.

An IXP is a network facility that enables the interconnection of more than two independent autonomous systems, primarily for the purpose of facilitating the exchange of Internet traffic. Euro-IX was established in June 2001 with the goal of growing, bolstering and enhancing the IXP community. It has 69 IXPs as members from different parts of the globe.

Europe's digital chief Margrethe Vestager said in May that tech giants should be required to contribute to the cost of telecommunications infrastructure, something that telecoms operators have been lobbying for a long time.

Telecom operators have frequently voiced their annoyance at the fact that companies like Google, Netflix, and others have profited from investments in fibre and cellular infrastructure, while operators are required to ensure there is enough capacity to satisfy demand.

Thierry Breton, the industry chief for the European Commission, said in September that he would launch a consultation on SPNP (Sending Party Network Pays) model in the beginning of 2023 before proposing legislation.

But Euro-IX warned on Tuesday that the measures to make tech companies contribute to the cost of telecom infrastructure run the danger of lowering the quality of service for internet users in Europe. In a letter to Breton and Vestager it said the move could "accidentally create new systemic weaknesses" in critical infrastructure.

"The internet is a complex ecosystem, and it is policy-makers who are ultimately responsible for systemic effects resulting from policy choices," wrote Bijal Sanghani, managing director of Euro-IX, adding that lawmakers should avoid prioritising administrative rules over technical necessity or a high quality internet.

Traffic tax

In recent months, opponents of the planned SPNP model have expressed concern that the so-called "traffic tax" might force digital platforms such as Facebook to route their services through ISPs located outside of the EU.

There is a possibility that platforms would lower the quality of their services in order to save money on fees, which might have a knock-on effect for users in Europe. They might also pay the fees but charge the end users instead.

Critics also argue that the new measures violate the EU's net neutrality regulations, which forbid ISPs from throttling or blocking traffic in order to give certain services priority over others.

In a letter signed by 34 NGOs from 17 countries in June, the net neutrality advocates said that such proposals have been thoroughly debated over the past 10 years, and they have always been rejected by governments, lawmakers and regulators across Europe and the rest of the world.

In October, the Body of European Regulators for Electronic Communications (BEREC) said that it does not support the idea of making big tech firms pay for the telecom infrastructure.

"BEREC has found no evidence that such (a direct compensation) method is justified given the current state of the market,' the organisation said in its initial findings.

However, telecom lobby group ETNO (European Telecommunications Network Operators), which represents Telefonica, Deutsche Telekom, Orange Group and others, responded to BEREC's conclusions by claiming that they were out of date and announcing that it would provide the European Commission with fresh information in support of its position.