Competition and investment in the Internet value chain in Europe

The CEOs of Deutsche Telekom, Vodafone, Telefonica and Orange released a joint statement on 14 February 2022 that called upon large content platforms “to contribute to the cost of the European digital infrastructure that carries their services.” The statement raised several questions and left them unanswered. The aim of the letter seems to be a call for a regulatory intervention. South Korea’s Sending Party Network Pays (SPNP) regime is referred to positively as a way to create a “fair” regulatory environment. The letter relies heavily upon a proposal put forward by the European Telecommunications Network Operators’ Association (ETNO) to move towards a SPNP regime. But the letter is short on detail and includes some fiery rhetoric, like the claim that telcos “cannot make a viable return on our very significant investments, putting further infrastructure development at risk.” The purpose of this report is simple: are the telcos claims true? What data is available that would provide some answers? Since South Korea has adopted a SPNP regime, we can also unpack what this entails and what the likely consequences would be, both for South Korea as well as the rest of the world.

Over the past few months there have been several consulting reports as well as regulatory findings on this topic. What makes our report different is that we use publicly available data sources to show what the actual situation is like in various countries. Based on the evidence, we try to constructively contribute to the debate. You can download the PDF here.