Netflix among tech firms that may have to pay towards broadband costs in Europe

Deutsche Telekom, Orange, Telefonica, Telecom Italia and other operators lobbied for two decades to get leading technology companies to contribute to 5G and broadband roll-out.

The tech firms call it an internet tax that will undermine EU network neutrality rules. Pic: Jason Alden/Bloomberg

Tech giants including Google parent company Alphabet, Facebook owner Meta, and streaming platform Netflix could be forced to pay some network costs following a consultation into the future of Europe’s telecoms sector.

The European Commission launched the consultation on Thursday following two decades of lobbying by Deutsche Telekom, Orange, Telefonica, Telecom Italia and other operators to get leading technology companies to contribute to 5G and broadband roll-out.

They argued that companies, including Amazon and Microsoft, account for more than half of data internet traffic. The tech firms, in response, call it an internet tax that will undermine EU network neutrality rules to treat all users equally. The 12-week consultation will end on May 19.

EU industry chief Thierry Breton cited the heavy investments required to roll out 5G and broadband, saying he was not targeting any company.

"The burden of these investments is heavier and heavier. And that is in part because of a low return on investment in the telecoms sector, the increase of the cost of raw materials, and the world geopolitical context, the cost of energy, of course, because that has a big role to play," he told a news conference.

"I want to say right away, that all of this reflection isn't aimed against anyone at all, rather it's for our fellow citizens," Mr Breton said. He said a contributions mechanism could be one of the solutions.

Respondents will be asked whether large traffic generators should be subject to a mandatory mechanism of direct payments to finance network deployment and also whether the EU should create a continental or digital levy or fund, according to a document seen by Reuters last month.

"We hope to move very quickly so that in the summer we will be able to come back with conclusions and then we will see what we do to continue to make progress," Mr Breton said. Any legislative proposal will need to be agreed with EU countries and EU lawmakers before it can become law.

"This consultation is a positive and urgent step towards addressing major imbalances in the internet ecosystem to the benefit of European end-users," telecoms lobbying group ETNO said in a statement.

Tech group Computer & Communications Industry Association (CCIA) criticised the proposal.

"Europeans already pay telecom operators for internet access, they should not have to pay telcos a second time through pricier streaming and cloud services," Christian Borggreen, CCIA Europe senior vice president, said in a statement.

- Reuters