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Dec 18, 20246 min read

Global Civil Society: Declaration on Cost-Sharing

 

The undersigned organizations and individuals express deep concern about the growing global trend to implement a direct payment mechanism (“cost-sharing,” “network contribution,” “network fee,” “fair share”) from content and application providers (CAPs) to telecommunications operators worldwide.

In Europe, discussions on this matter have unfolded over the past year, with diverse stakeholders across various sectors expressing opposition to the cost-sharing proposal. Their concerns range from apprehensions about free competition1, media plurality, and consumer protection to considerations of fostering innovation2, maintaining the quality of service3, and preserving the principles of net neutrality4, as well as safeguarding the openness and global nature of the Internet5.

Indeed, a cost-sharing mechanism representing direct or indirect monetary compensation to telecom operators based on interconnection traffic flows has immediate and far-reaching effects on users and digital markets6. It negatively impacts consumers’ freedom of choice and online service prices7. According to an independent assessment8, this idea would result in an unpredictable and inconsistent legal environment, generating a significant administrative burden that is hostile to the open Internet, hindering the promotion of investment and innovation.

Therefore, we have combined efforts to demand that governments worldwide refrain from adopting cost-sharing, deeming it a counterproductive and dangerous measure.


Currently, there is no evidence of interconnection market failure anywhere globally. Over the past decade, regulators have studied interconnection markets, finding no evidence of any market failures justifying regulatory intervention based on cost-sharing9. As stated by BEREC, the Body of European Regulators for Electronic Communications: “[...] the Internet has adeptly handled increasing traffic volumes, changes in search patterns, technologies, and business models, along with (relative) market power dynamics among industry participants. These advancements are mirrored in the IP interconnection mechanisms that oversee the Internet, evolving organically without necessitating regulatory intervention.” Simultaneously, a diverse set of players in the Internet’s application layer10, including CAPs11, has invested heavily in broadband networks, emphasizing the complexity of financing network infrastructure.


According to the OECD, “Since the Internet was commercialized in the early 1990s, it has developed an efficient market for connectivity based on voluntary contractual agreements. Operating in a highly competitive environment, largely without regulation or central organization, the Internet model of traffic exchange has produced low prices, promoted efficiency and innovation, and attracted the investment necessary to keep pace with demand.”12

There is no doubt that a cost-sharing regime will harm consumers, their rights, internet connectivity, and their ability to choose the content they want to consume. In South Korea, the only country to have implemented such a regime legally, the results have been high prices, a flawed interconnection market, and an adverse effect on network investment13. Furthermore, in Europe, numerous stakeholders and interested actors have expressed opposition to the proposal, including the EU’s largest associations representing private14 and public15 broadcasters, which have shown concern about media plurality; the actors involved include the Sports Rights Owner Coalition, the Motion Picture Association, and Wikimedia Europe16.

We would also like to highlight how such proposals exacerbate global concerns about Internet access, which persist despite the recent COVID-19 pandemic, demonstrating the Internet’s vital role in today’s societies17.

Given the existing evidence and the overwhelming adverse reaction to this proposal in Europe, we express extreme concern about the “tsunami of policies” that have emerged worldwide based on the European Commission’s uninformed and dangerous idea of a cost-sharing policy.

Telecom companies in India18 have reportedly pointed to the European Union’s fair share policy as a reason for the local government’s unnecessary intervention in the market. A similar scenario is currently underway in Brazil19. To be clear, most EU governments oppose these plans20, and major countries in the bloc have called on the European Commission to adhere to its own due diligence process21, such as requiring the publication of a regulatory impact assessment or taking into account the views of stakeholders, before proposing any new bill on cost-sharing. Although Thierry Breton22, the former CEO of France Telecom and current EU Commissioner for the European Internal Market, has given the impression that the EU will put the cost-sharing policy into effect, other world leaders should be cautious about following his example.

In conclusion, the debate on cost-sharing is not about giant technology companies or investment in infrastructure. On the contrary, it is about repositioning telecom operators as gatekeepers, enabling them to demand payment from any content provider that wants to reach their customers. Furthermore, regardless of telecom operators’ attempts to distort the argument23, this represents a violation of net neutrality24 and users’ rights. In short, this “telephony-era’ business model signifies a radical change in how the global Internet works, with the power to fragment it.

In light of all this, we call on policymakers and governments worldwide to oppose the imposition of direct or indirect cost-sharing payment obligations for the benefit of just a handful of telecom operators. The current system works and has proven its resilience and ability to evolve alongside the Internet.


SUPPORTERS

Civil Society Organizations


  • ABRINT – Brazilian Association of Internet and Telecommunications Providers, Brazil

  • Centre for Internet and Society, India Derechos Digitales, Chile

  • Digital Medusa, New York

  • EDRI, Belgium

  • Electronic Frontier Foundation (EFF), United States

  • Epicenter.works, Austria

  • Hermes Center, Italy

  • Homo Digitalis, Greece

  • Instituto Nupef, Brazil

  • ITS – Institute for Technology and Society, Brazil

  • Internet Freedom Foundation, India

  • IPANDETEC, Panama

  • ISOC Brazil, the Brazilian Chapter of the Internet Society

  • IT-Pol, Denmark

  • Open Rights Group, United Kingdom

  • OpenNet, S. Korea CDT, United States

  • Politiscope, Croatia

  • SUPERRR Lab, Germany

  • The Internet Society

  • The Lisbon Council, Belgium

  • Wikimedia Deutschland, Germany


Para imprensa e mais informações, escreva para midias@itsrio.org


 

1. German Monopoly Commission issued a stark warning about the policy idea: https://www.monopolkommission.de/images/Policy_Brief/MK_Policy_Brief_12.pdf

3. 29 Internet experts and academics send a letter to the Commission urging to abandon the “Sending Party Network Pays” proposal: https://www.komaitis.org/personal-blog/29-internet-experts-and-academics-send-a-letter-to-the-commission-urging-to-abandon-the-sending-party-network-pays-proposal

4. When it comes to fair share, network neutrality should be on the table: https://www.komaitis.org/personal-blog/when-it-comes-to-fair-share-network-neutrality-should-be-on-the-table

5. Internet Society’s Submission to the European Commission’s Exploratory Consultation on “The future of the electronic communications sector and its infrastructure

6. EU Telecoms’ Newest Proposal to force websites to pay them is just as terrible as the previous one: https://cyberlaw.stanford.edu/blog/2023/07/eu-telecoms-newest-proposal-force-websites-pay-them-just-terrible-their-previous-one

7. See position of BEUC, the umbrella of all EU consumer protection organisations:

8. Oxera study commissioned by Dutch Ministry of Economics warns significant setup and administration costs:

https://open.overheid.nl/documenten/ronl-8a56ac18a98a337315377fe38ac0041eb0dbe906/pdf. Moreover, the BEREC preliminary assessment (BoR (22) 137) expects any such interventions to cause subsequent problems which will demand further intervention: https://www.berec.europa.eu/system/files/2022-10/BEREC%20BoR%20%2822%29%20137%20BEREC_preliminary-assessment-payments-CAPs-to-ISPs_0.pdf

11. Google, Amazon, Meta and Microsoft Weave a Fiber-Optic Web of Power:

12. Weller, D. and B. Woodcock (2013-01-29), “Internet Traffic Exchange: Market Developments and Policy Challenges”, OECD

Digital Economy Papers, No. 207, OECD Publishing, Paris. http://dx.doi.org/10.1787/5k918gpt130q-en

13. Kyung Sin “KS” Park and Michael R. Nelson, “Afterword: Korea’s Challenge to the Standard Internet Interconnection

Model,” in The Korean Way With Data: How the World’s Most Wired Country Is Forging a Third Way, edited by Evan A.

Feigenbaum and Michael R. Nelson (Washington DC: Carnegie Endowment for International Peace, 2021), 73–75,

15. EBU’S reply to the consultation on the future of the electronic communications sector and its infrastructure

16. 50+ ISPs, NGOs and broadcaster groups hit out at “Big Telco bias” driving anti-competitive EU network fee proposal

17. More than a third of world’s population have never used the internet, says UN

18. Extension of last date to receive comments! counter comments on TRAI's Consultation Paper on 'Regulatory Mechanism for Over-The-Top (OTT) Communication Services, and Selective Banning of OTT Services’: https://www.trai.gov.in/sites/default/files/PR_No.73of2023.pdf; see also,How TRAI consultation may make online

20. Majority of EU countries against network fee levy, sources say,

23. Yes, Telefonica, Forcing Apps to Pay ISPs Violates Net Neutrality,

24. Id.

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