Italy’s digital state secretary defines senders-pay initiative ‘premature’

The Italian state secretary for the digital transition called for caution regarding a possible EU initiative to make tech companies contribute to telecom infrastructure in an interview with EURACTIV.

Previously, Italy pushed with France and Spain to accelerate an initiative at the EU level, driven by Internal Market Commissioner Thierry Breton, to make the most significant traffic generators like Google and Netflix contribute to the cost of digital infrastructure.

The initiative on the so-called ‘senders-pay’ principle proved controversial, with tensions among EU countries coming to a head at the last EU Council meeting of ministers in charge of the telecommunications portfolio on 2 June.

“In the opinion of the majority of European countries, the current relationship between OTT [over-the-top] and telecom operators is well-balanced, with benefits for both parties. This is also the position of the Italian government,” Alessio Butti, Italy’s state secretary for the digital transition, told EURACTIV in an exclusive interview.

Butti is much more cautious than his predecessor Vittorio Colao, who had previously been the CEO of Vodafone Group for a decade. Butti defined any proposal at this stage as “premature” and joined those asking the EU Commission to show evidence and data before advancing any new measure.

Butti’s mandate includes telecom policy, a portfolio he shares with Adolfo Urso, the minister for economic development. Butti and Urso belong to the same political party, Giorgia Meloni’s Brothers of Italy, within which the position on the matter still seems to be open for discussion.

EURACTIV understands Italy will finalise its position on the senders-pay based on the results of the Commission’s consultation on the future of connectivity.

EU Parliament asks large traffic operators to chip in on networks costs

A majority of lawmakers in the European Parliament voted in favour of a resolution backing up the senders-pay principles during a plenary vote.

Meanwhile, Butti pointed out that content demand is the broadband access driver. In contrast, a direct contribution from the content providers would create a situation where telecom operators use their market power and position vis-à-vis customer access.

“This would negatively impact the funds available to OTTs for investment in quality European content and the wider ecosystem. In this case, consumers would be negatively impacted by higher retail prices,” Butti said.

In addition, he noted that the senders-pay principle “risks disrupting efficient cooperation between content and application providers and Internet service providers.”

“This risks creating a vicious cycle of higher prices, lower demand, less choice and less use to the detriment of all market players and consumers, thereby endangering the very objectives of the ‘Digital Decade 2030’.”

While the state secretary said Rome supports the quick deployment of new generations of networks like fibre and 5G, he also stressed the need to make these networks more efficient, most notably with the extensive adoption of edge cloud computing.

EU Commission starts showing hand in questionnaire on ‘fair share’ initiative

The European Commission is set to open a consultation on the future of the connectivity sector, including whether digital players should contribute to deploying high-capacity networks like 5G.

Butti also challenged the idea of the perceived investment gap, which a Commission-sponsored study estimates to be at least €174 billion, noting there are already massive investments in telecom infrastructure, with more on the way.

“Italy’s problem certainly isn’t the lack of investment,” Butti said, pointing to the abundance of public money coming via the European cohesion funds and the Recovery and Resilience Facility. “The money is there, but the operator is not doing its job on time.”

Moreover, the state secretary contested the telecom operators’ argument that the return on investments is too low, arguing that the problem comes down to their own tariff structure.

“Retail fibre prices in Europe are not regulated and are decided on autonomously by telecom operators based on their marketing and business strategies. Telecom operators make unlimited offers, voluntarily, only because they want to increase demand and fill their networks.”

Still, he added, fibre networks are practically unused in the Italian market because subscribers are unconvinced to pay a surcharge for fibre connectivity. If content providers are charged for the traffic they generate, they could either degrade their content or raise their prices, lowering demand for very high-capacity networks.

Butti also opposed the views that the OTTs generate traffic whilst traffic demand comes from the users because “consumers dictate their own bandwidth use.”

Another argument he dismissed is that the costs of investing in the network are directly correlated to traffic growth.

Echoing the opinion of the Body of European Regulators for Electronic Communications, he noted that the costs for fixed networks are not traffic sensitive, and those for mobile traffic are low and keep falling.

EU regulators give negative view on proposal to make platforms pay for telecom infrastructure

The Body of European Regulators for Electronic Communications raised several critical points in its preliminary assessment of an upcoming senders-pay model that would see the most data-intensive platform contributing to the financing of digital networks.

“One aspect that I would like to explore, and the European Commission should do so as well, concerns the true rate of the utilisation of the new fibre networks and how to use them more efficiently than they are being used today,” he said.

In particular, Butti noted that in Italy, telecom operators complain about a low take-up of new fibre networks and ask for the government’s help to increase and support the demand, which seems difficult to conciliate with complaints that OTTs systematically push up the traffic demand.

“It is illogical to tax precisely what we want to promote most, namely digitalisation,” he said, adding that a senders-pay initiative would discourage investments in digitalisation and favour operators based outside Europe.

[Edited by Zoran Radosavljevic]