Broadband expansion: Telco groups demand support from Netflix & Co.

It is no longer just the providers who sell the Internet to men and women who benefit from the ever faster Internet. There are now many beneficiaries who can offer their services more and more profitably thanks to a fast and stable Internet connection. Streaming services like Netflix & Co. in particular are among them. Network operators no longer want to put up with this. The ever-advancing broadband expansion should also be supported by the big players in the field of tech corporations.

Telecom groups are incensed

Until now, it has been the responsibility of the European telecom groups to ensure broadband expansion in Europe. Naturally, the conglomerate of disparate providers is incensed that they have to invest while other companies stand there as beneficiaries, merely maximizing profits. Now the 13 chairmen have decided to call for financial support. In the future, companies such as Netflix, Amazon and Google should also contribute to the expansion. To make the public aware of the current imbalance, the telecoms groups have made it clear what costs they currently have to bear. They are investing a whopping 52.5 billion euros a year to provide fast and stable Internet. Not only is the cable and fiber-optic network being expanded. The expansion of the current 5G standard is also part of this.

Unfair cost distribution

It is no longer acceptable that only the telecommunications companies have to pay for the costs, he said. Accordingly, they are now calling for participation by the major technology groups. After all, it is precisely these that would benefit from nationwide, stable and fast Internet. In the statement by the CEOs of the telecom groups, it is said that a

“large and growing portion of data traffic is generated and monetized by large tech platforms”

Concept requires more sustainability

Network operators are clear in their words. For example, the current model is simply not sustainable. In the long term, they say, one can only ensure broadband expansion if the big tech companies also make their contribution. It is clear that it is not just the costs that are currently upsetting the telco groups. With services like Magenta TV (Telekom) or GigaTV (Vodafone), the network operators are already competing directly with Netflix & Co. The financial handicap resulting from the investment costs is difficult to make up for. While one can understand the frustration, the CEOs of Telekom, Vodafone, Telefónica & Co. do not offer precise solutions either. In particular, the assessment limits for financial support from other tech companies would be more purposeful.

Cost increase for network operators

The fact that things have been bubbling up in the ranks of the telecom groups for some time now is nothing new. The main reason for this is the rising cost of network expansion. But since many third-party companies are benefiting from broadband expansion, investor interest is also growing. Accordingly, Deutsche Telekom is increasingly working with external companies to contain the costs of fiber-optic expansion a little. It somewhat appears that Netflix and other tech groups simply do not consider it necessary to get their own hands dirty. After all, the demands of the telecom groups have been around for a few years. Whether a solution will eventually be found between the two parties remains to be seen.