Europe’s major telecommunications providers are calling for a change in policy

There is dissatisfaction among Europe’s major telecommunications providers. They are calling for different political framework conditions to strengthen Europe as a digital location and are holding US companies accountable. These were the key statements from the heads of the four largest European telecommunications companies Telekom, Vodafone, Telefonica and Orange at the Mobile World Congress (MWC). The mobile phone trade fair took place this week in Barcelona.

Tim Höttges, CEO of Deutsche Telekom AG, found clear words: “We have a serious problem.” While the telecommunications industry in Europe invests 109 euros per inhabitant annually in expanding the digital infrastructure, in the USA it is the equivalent of 240 euros.

Until 2016, the world was “okay,” said Höttges. After that, the USA moved away and data traffic in Europe’s networks “exploded”. The Telekom boss alluded to the criticism from the European telecommunications industry, according to which US technology giants such as Google with the video platform YouTube, Meta (Facebook, Instagram, WhatsApp) and Netflix are responsible for a large part of the data traffic on Europe’s networks, but do not pay for it pay.

“A question of fairness”

In this debate, Internet companies argue that their offerings make it interesting for consumers to use telecommunications services in the first place. The platforms largely make profits through subscription models or advertising and use user data.

It is “a question of fairness” that US corporations “make a contribution to the infrastructure that they use so heavily,” said Höttges. In 2023, it was said in Barcelona that the largest online services (Amazon, Apple, Meta, Google, Microsoft and Netflix) accounted for around 55 percent of data traffic. This costs European network operators around 14 billion euros annually.

Tough competition in Europe

The heads of the four largest European telecommunications providers see the reason for the comparatively low investments in Europe in adverse conditions and a fragmented market that is far from a true internal market. Most domestic telecommunications companies don’t even earn back the capital invested, complains Höttges.

According to him, there are 45 telecommunications companies in Europe – from Höttges’ point of view, that is far too many; there are significantly fewer in the USA or Asia. Strict antitrust rules in different countries made the necessary market consolidation more difficult. The competition is so tough that companies don’t earn enough money for the necessary investments, said the Telekom boss. “We need a new regulatory framework,” demands Telefonica boss Jose Maria Alvarez-Pallete. “We are driving digital change, but it is not enough,” says Vodafone boss Margherita della Valle and calls for better investment opportunities. “We are now in the industrial internet era where you need more connectivity and more innovation.”

Last year, the EU first considered asking large US corporations to pay for data traffic. Little has happened since then. There are European elections in June, and the term of office of the current EU Commission expires at the end of October. After that, the topic will “certainly be put back on the agenda,” said Höttges.

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