European Telecoms Urge Big Techs To Share Network Costs As Energy Crisis Loom

Author: Anusuya Lahiri | September 26, 2022 06:11am

Deutsche Telekom AG (OTC:DTEGF), Orange (NYSE:ORAN), Telefonica SA (NYSE:TEF), Vodafone Group Plc (NASDAQ:VOD), and several other European telecoms providers made their most vigorous push for Big Tech to share network costs, citing the energy crisis and EU climate change goals.
Inflation jumped to a new all-time high of 8.9% in July, sparking a cost-of-living crisis in Europe, fueled by rising energy costs. Since Russia has been steadily providing less gas to Europe in response to Western sanctions, small companies and restaurants urged the government to step in and assist them with rising energy bills, which rose by as much as 400% in 2021.
Europe's telecoms operators argue that U.S. tech firms account for more than half of internet traffic and should bear some of the cost of upgrading infrastructure, Reuters reports.
However, Big Tech like Alphabet Inc's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google, Meta Platforms Inc (NASDAQ:META), and Netflix Inc (NASDAQ:NFLX) snubbed such requests. They reasoned, having already invested in equipment and technologies to deliver content more efficiently.
Recently the European Commission explored a legislative proposal forcing tech companies to help pay for the roll-out of 5G and fiber cables across the 27-country European Union.
The sector, which invests €50 billion ($48.5 billion) annually in infrastructure, needs more funding urgently, the report cited chief executives of the telecoms providers.
They highlighted rising planning and construction costs, including prices for fiber optic cables, energy prices, and other input prices in the connectivity sector.
They sought action to build strength for the metaverses, swiftly necessitating fair contribution from the largest traffic generators to the sizeable costs they currently impose on European networks.
Price Action: VOD shares traded lower by 4.26% at $11.46 in the premarket on the last check Monday.