sender pays – Techdirt (original) (raw)

Meta, Deutsche Telekom Standoff In The EU Is Something To Keep An Eye On

from the pay-me-twice-for-doing-nothing dept

Telecom lobbyists have been working overtime in both the US and EU, trying to get policymakers to force internet companies to pay them billions of extra dollars for no coherent reason. These efforts, routinely dressed up as serious adult policy, usually involve false claims that tech companies are getting a “free ride” on the Internet, and should therefore give telecoms billions of dollars. You know, just because.

The effort has been particularly heated of late in the EU, where former EU Internal Market Commissioner Thierry Breton, a former CEO of France Telecom, had been pushing a plan to effectively tax tech companies on behalf of telecoms (already being paid an arm and a leg for bandwidth by tech companies and consumers alike).

It’s bad faith bullshit all the way down, and it’s an extension of the decades old net neutrality wars, which also involved predatory telecom monopolies hungrily eyeing the fat revenues of tech service companies, then concocting elaborate, creative new ways to redirect a lot of that money to themselves.

This month there’s been a notable standoff between Meta and one of the biggest EU ISPs, Deutsche Telekom (DT). DT has been demanding an end to traditional, reciprocally beneficial, free transit peering relationships in favor of charging Meta extra money simply to reach DT customers.

In a blog post explaining the stand off, Meta (correctly) refused to play along, and says it’s now striking a new partnership with a third-party transit provider:

“Following months of discussion, we are surprised and disappointed by the breakdown in negotiations with Deutsche Telekom. Meta has taken significant steps to keep its apps available directly through Deutsche Telekom, but given the court ruling concerning the unprecedented and unacceptable fees demanded, we are now routing our network traffic through a third-party transit provider, instead of exchanging traffic directly with Deutsche Telekom.”

Meta routinely operates in bad faith on a litany of issues, but this is one policy standoff in which they’re absolutely in the right.

You might recall a similar standoff between Verizon and Netflix, which resulted in Netflix users seeing streaming video slowdowns because Netflix initially refused to play along. The goal, again, is to eliminate industry standard free peering arrangements and replace them with new, barely regulated systems in which everybody pays telecoms more money than ever.

The shift is particularly problematic if you’re a company that lacks the budget or political influence of companies like Google, Netflix, or Meta.

Net neutrality expert and Stanford Law Professor Barbara van Schewick warns in a blog post that the next step for DT is to specifically punish Meta by slowing all traffic over that third party transit route, making Meta-owned services work more poorly for potentially millions of EU residents:

“If DT does this, then millions of DT internet subscribers could have WhatsApp messages that won’t load, Instagram stories that stutter, and Facebook updates that don’t update.

Ultimately, the result of this showdown could determine whether the internet will pivot to a disastrous model where every app and site has to pay every ISP in the world.”

Some groups have warned that the EU’s telecom industry’s plan to tax Big Tech giants would simply drive up online costs for consumers, given Big Tech companies would just pass these added costs on to users already paying an arm and a leg for bandwidth. Other organizations have warned the internet could become inherently less stable as online companies try to reroute their traffic around such fees.

And in South Korea, where telecoms convinced regulators to implement a similar tax on Big Tech companies, ISPs have taken to suing Netflix simply because Squid Game was popular with consumers and that resulted in a bandwidth consumption spike. The added costs of simply existing literally drove Twitch out of the country late last year because they couldn’t afford all the additional telecom surcharges.

This idea that big ISPs are inherently owed a cut of the revenues of services traveling over their networks is what launched the net neutrality wars around the world several decades ago, when AT&T insisted Google “wouldn’t ride our pipes for free.” It’s evolved in dumber and dumber ways ever since.

These modern incarnations are easily identifiable. They usually begin with a false claim that tech companies (be it Google, Netflix, or Meta) are getting a “free ride” on the internet, despite the fact they (and their customers) spend billions of dollars on bandwidth, hosting, transit, CDN, and other telecom costs. It is, as van Schewick observes, simply an effort by telecoms to “double dip”:

“Like all of Europe’s biggest telecom companies, DT wants to get paid twice for accepting and delivering the data its customers request – once by its own internet service customers, and again by the websites and services these customers want to use. “

Telecoms have gotten the press and some policy makers to portray these efforts as good faith reforms, usually by claiming that if you let them impose broad new nonsensical taxes on internet services, it will somehow improve broadband deployment and make life better for everyone.

But in broken, heavily monopolized telecom markets (be it the U.S. or EU) it doesn’t work like that.

Tech companies pass on the new costs to consumers, raising the costs of internet-based services. Telecoms and investors pocket the proceeds while charging captive customers ever-higher rates, because they can. And everything generally becomes more unstable as companies try to navigate around the new, pointless, bureaucratic logjams created by telecoms’ insatiable need to double dip.

Trump’s chosen FCC pick Brendan Carr, who has been angling for FCC chiefdom for most of the last decade (mostly through whining about Chinese-owned social media companies he doesn’t regulate on cable TV), will absolutely be making such a system a top policy priority should Trump retake the White House in November (he wrote a Project 2025 chapter about it).

It’s all a pointless, costly, giant mess you’d like to think U.S. policymakers could competently avoid.

Filed Under: eu, sender pays, telecom, transit
Companies: deutsche telekom, meta

FCC’s Carr Wrote A ‘Project 2025’ Chapter On Ruining The FCC And Taxing Tech Giants, Which May Have Violated The Hatch Act

from the hello-I-have-some-exceptionally-terrible-ideas dept

Tue, Jul 23rd 2024 05:27am - Karl Bode

The leading candidate to head the FCC should Trump win re-election is facing calls for an investigation into Hatch Act violations after he helped co-author the controversial Project 2025.

Sixteen House Democrats have sent a letter to government officials arguing that Carr’s involvement in the openly political Project 2025 is a clear violation of the Hatch Act and should be investigated:

“The Misuse of Position Rule clearly prohibits federal employees from using their government positions, titles, or authority to sign letters, write op-eds, speak in their personal capacity, or—as it were—draft the blueprint for archconservatives to take over their agency.”

For his part, Carr claims he was only participating in the controversial project in his capacity as a citizen, and received the green light from FCC ethics officials before his participation. Even should he be investigated and found culpable, fines for Hatch Act violations are generally rather pathetic.

Project 2025 is, if you’re unfamiliar, a extremist proposal being circulated by key MAGA Republicans that calls for the mass firing of civil servants based on their ideological beliefs, a radical and undemocratic expansion of power for the president, the dismantling of the Department of Education, numerous new corporate tax cuts, draconian new abortion restrictions, and a ban on pornography.

FCC Commissioner Brendan Carr, who, you’ll recall, spends most of his time on cable news complaining about a company he doesn’t actually regulate (TikTok) in order to get attention, wrote a chapter about what should happen at the FCC under a second Trump term.

If you’re familiar with Carr there’s nothing too surprising here. Instead of proposing the agency do its actual job and protect competition and consumers from the whims of AT&T and Comcast, Carr instead calls for a dramatic expansion of the agency’s efforts to “rein in big tech” (which in Trump parlance means harassing any company that tries to moderate racist right wing political propaganda on social media).

Carr has a few sections of his chapter where he pretends he’s interested in “empowering consumers,” but again that mostly involves vaguely whining about tech companies and a dangerous dismantling of Section 230. It has nothing to do with “antitrust reform” or “reining in corporate power” and everything to do with bullying companies that don’t toe the increasingly unhinged authoritarian line.

Should Trump win the next election and Carr is appointed FCC boss, his biggest proposal will indisputably be a giant new telecom tax on tech companies. For half a decade now, AT&T, Comcast, Verizon and friends have used Carr as the spearhead for their plan to impose major new taxes on tech giants under the pretense of funding U.S. broadband deployment (sometimes called “sender pays”).

I’ve discussed (more times than how I can count) how this unserious policy is largely just a handout to subsidy-abusing regional telecom monopolies. It involves falsely claiming that tech companies get a “free ride on the internet” and should pay telecom giants billions of dollars for no coherent reason.

It’s a plan that drives up costs for consumers (since tech companies will simply forward the costs on to you) and effectively breaks the internet (just ask the Internet Society). In South Korea it drove companies like Twitch out of the country because they couldn’t afford to do business. All so telecom giants with a long history of subsidy fraud and abuse can get billions in additional subsidies.

I’ve written extensively on why Carr and AT&T’s call for a “big tech telecom tax” isn’t serious adult policy, but I’m still not entirely sure that “big tech” execs fully understand the scope. In the EU, telecoms have pushed proposals that would charge any internet service that accounts for over 5 percent of a telco’s average peak traffic billions of dollars in additional extra-government surcharges “just because.”

To be clear, the FCC’s Universal Service Fund (USF) program (which helps fund rural and school broadband) is in a dire need of a revamp, since the contributions historically came from levies on your home phone line.

And while Democrats and Republicans have flirted with the idea of including tech companies in that contribution base, I (as somebody that has studied this sector for decades) think it makes more sense to address widespread existing subsidy program fraud and abuse by industry giants and take direct aim at monopoly power (which is directly responsible for high broadband costs and stunted deployment).

That’s not stuff Carr is interested in because it’s not something AT&T and Comcast are interested in.

What Carr and AT&T are interested in is a big fat punitive, nontransparent, and badly managed tax that will be pocketed by subsidy-abusing telecom giants in exchange for fiber networks you’ll probably never actually see. And if Carr is Trump’s pick to head the FCC (a position Carr has been positioning himself for for the better part of a decade) it’s absolutely a policy that’s getting implemented on day one.

Filed Under: big tech, big tech tax, brendan carr, corruption, fcc, hatch act, project 2025, sender party pays, sender pays, tech, telecom

Big Telecom Eyes More Broadband Usage Caps (And A Tax On Big Tech) As Revenues Sag

from the do-not-pass-go,-do-not-collect-$200 dept

Mon, Jul 8th 2024 05:27am - Karl Bode

Things aren’t too exciting if you’re a telecom executive right now.

All the hype in tech is singularly fixated on the more headline catching, stock fluffing, and usually very broken aspects of “AI.” 5G, hyped as a transformative world changing tech by overly eager telecom marketing departments, wound up being a consumer dud that users don’t want to pay extra for. And subscriber growth is slowing to a trickle outside of new home builds.

So what is a poor telecom monopoly to do? If you’re AT&T CTO Jeremy Legg attending a global telecom grievance session held at a recent industry event, the answer is to start charging consumers more money for the same product in the form of usage caps and overage fees:

“One thing I would say is the telco industry historically has had these all-you-can-eat business models and I think the world is moving more toward consumption-based business models versus all-you-can-eat business models and so we’re going to have to adapt to that reality.”

By “we,” of course, Legg means you, the bandwidth-purchasing consumer.

We’ve noted for decades that there’s absolutely no technical justification to have usage caps and overage fees on fixed broadband lines. It’s simply the act of price-gouging an uncompetitive market where consumers usually can’t switch to an alternative provider. AT&T has been at the forefront of this movement for decades, so it’s not surprising to see this as their very first answer to sagging revenues.

Of course it’s not all bad news for telecom. The last five year fixation on the obvious problems with “big tech” has allowed telecom to largely skirt under the internet policy radar. You don’t hear much about efforts to rein in telecom monopoly power anymore; outside of some freshly restored net neutrality rules that probably will never be enforced and may not survive the next presidential election.

International telecom executives know they need something to [goose stock valuations](http://"The reality is that our return on investment, our growth, is not good enough, and we can't be happy with where we are as an industry at the moment," said Kim Andersen, the chief technology officer of Australia's Telstra, in a DTW call to arms. "We need to reinvent this industry and save this industry.") and spike sagging revenues:

“The reality is that our return on investment, our growth, is not good enough, and we can’t be happy with where we are as an industry at the moment,” said Kim Andersen, the chief technology officer of Australia’s Telstra, in a DTW call to arms. “We need to reinvent this industry and save this industry.”

In telecom, of course, that won’t actually involve being innovative or developing new exciting products people actually like. Because what most people want is a simple, dumb, inexpensive pipe to the internet. And it most certainly won’t involve trying to compete harder for subscriber affections, because that again would involve lowering prices, expanding access, or improving low-quality customer service, all stuff that harms short-term quarterly returns.

Enter the other big looming telecom gambit: the effort to force tech companies to pay them billions of dollars for no reason. Pitched to regulators in the EU and U.S. as a way to shore up broadband to areas telecoms historically couldn’t care less about, the idea effectively involves pretending that tech companies get a “free ride” on the internet, then imposing extra, duplicative telecom surcharges simply for existing.

I’d recommend this Internet Society piece on these so-called “sender pays” initiatives and how they ultimately just break the internet while driving up costs for everybody.

Of course consumers and enterprise broadband customers alike pay an arm and a leg already for broadband access thanks to widespread telecom monopolization. And despite a steady stream of billions in subsidies, those monopolies’ fiber expansions are mysteriously always left somehow half-complete. And now they’re proposing forcing tech giants (read: you) to pay for more fiber you may never see.

Despite this being a ham-fisted cash grab by an industry long known for ham-fisted cash grabs, these efforts are gaining more traction than you might think. The model has seen some success in South Korea, driving companies like Twitch out of the country and driving up costs for consumers. In the EU, telecoms are pushing for a tax for any tech company that accounts for over 5% of a telco’s average peak traffic.

The telecom industry effort has so far seen little meaningful traction under the Biden administration. But if Trump wins the next election, I 100% guarantee that one of FCC Boss Brendan Carr’s (R, AT&T) top priorities will be pushing big tech companies to pay telecoms billions of dollars in new, senseless telecom taxes in exchange for a bunch of layoffs and fiber networks you’re unlikely to ever actually see.

Filed Under: broadband, caps, high speed internet, sender pays, tax, telecom, wireless

South Korean ISP KT Caught Infecting Torrent Users With Malware

from the very-dumb-ideas dept

Mon, Jul 1st 2024 05:27am - Karl Bode

You might recall that “way back” in 2007 Comcast here in the U.S. was caught throttling BitTorrent uploads and subsequently lying about it. Since BitTorrent was popular, hoovering up network resources, and posed a threat to traditional cable TV, Comcast execs thought their best approach would be to make an entire file transfer system less efficient. And then lie repeatedly about it.

17 years later and things are notably different. BitTorrent piracy isn’t as popular thanks to the rise of affordable streaming options. Networks are significantly more robust, and network congestion management is far more intelligent and way less intrusive. The network neutrality debate (and inconsistent rules) have also required ISPs be a bit more transparent about network management.

Which is why it’s all the more weird to see South Korean ISP KT engaging in some historically ignorant behavior. The ISP was recently caught infecting more than half a million of its subscribers with a malware specifically designed to interfere with Torrent traffic and spy on users:

“The Gyeonggi Southern Police Agency, which carried out the raid and investigation, believes this was an organized hacking attempt. A dedicated KT team allegedly planted malware to eavesdrop on subscribers and interfere with their private file transfers…police have already identified more than a dozen persons of interest, who have been referred to the prosecutor.”

The attack took place in May of 2020, and while the investigation is ongoing, it’s presumed that KT was trying to cut down on costs. The source reporting suggests that KT executives viewed BitTorrent (which again can be used for things other than piracy) as malware itself and decided, foolishly, to respond in kind.

While the network usage by piracy is still very manageable on any well-run network, there has been a steady uptick in piracy lately as streaming companies charge more and more money for worse service (humans, if you hadn’t noticed, aren’t great at learning from history or experience). Still, modern network management gear should more than handle the congestion, making the use of malware extreme.

Keep in mind that KT operates in an environment of regulatory capture in South Korea. A few years ago, Korean telecoms convinced gullible regulators to pass a new “sender pays” regulatory framework wherein edge providers and content companies like Google and Netflix are forced to pay telecoms additional fees just to have their traffic successfully reach its destination (consumers).

It’s driven up costs for everyone, and driven some such services, like Twitch, completely out of Korea. It also resulted in KT suing Netflix back in 2021, claiming that the streaming company owed it money simply because the “Squid Game” TV show was so popular. The Internet Society has explained in detail why this approach is terrible for markets and consumers, but that hasn’t stopped ever-greedy telecoms from pushing corrupt lawmakers to implement the same approach in both the U.S. and EU.

When you’re already operating in an environment of limited regulatory accountability, I’d wager you’re not as likely to think that infecting your own subscribers with malware will result in any meaningful repercussions. South Korean law enforcement, apparently, had other ideas.

Filed Under: net neutrality, netflix, security, sender pays, telecom
Companies: kt

Dumb, Telecom Industry Backed ‘Network Fees’ Drive Twitch Out Of Korea

from the please-pay-me-extra-for-no-coherent-reason dept

Wed, Dec 6th 2023 10:55am - Karl Bode

Twitch has announced that the company is shutting down in Korea after regulators there imposed a ridiculous new regulatory framework that drove the company’s operational costs through the roof.

Basically: Korean telecoms convinced gullible regulators to pass a new regulatory framework wherein edge providers and content companies are forced to pay telecoms additional fees just to have their traffic successfully reach its destination (consumers). It’s in addition to bandwidth costs, and, as we’ve pointed out for a while, it’s a dumb cash grab and the latest extension of the longstanding net neutrality wars.

In a blog post, Twitch CEO Dan Clancy explains that with the addition of these new mandated network fees, the company has found it impossible to turn a profit in Korea and has been forced to close up shop:

“Ultimately, the cost to operate Twitch in Korea is prohibitively expensive and we have spent significant effort working to reduce these costs so that we could find a way for the Twitch business to remain in Korea. First, we experimented with a peer-to-peer model for source quality. Then, we adjusted source quality to a maximum of 720p. While we have lowered costs from these efforts, our network fees in Korea are still 10 times more expensive than in most other countries. Twitch has been operating in Korea at a significant loss, and unfortunately there is no pathway forward for our business to run more sustainably in that country.”

For the better part of the last few decades, global telecom giants have been trying to “double dip.” As in, not only do they charge businesses and consumers an arm and a leg for (often terrible) broadband, but they’ve been trying very hard to institute new regulatory frameworks where consumer and content companies alike pay telecoms huge sums of additional money for no coherent reason.

Under Korea’s model, edge providers (like Netflix) are forced to pay “network service fees” to ISPs. Basically, ISPs there have claimed that they’re inherently owed more money if a TV show on Netflix is super popular, claiming they should be compensated for extra bandwidth costs.

Of course, bandwidth provisioning doesn’t really work like that. ISPs are supposed to build networks that can handle any peak capacity spikes caused by normal consumer demand. The origins of those demands are irrelevant. Consumers and edge providers have already paid an arm and a leg for bandwidth, particularly if regional monopolization has driven down any incentive to compete on price.

All they’re really doing here is trying to offload network operations and maintenance costs to someone else. In this case: Korean game streamers or Netflix users.

Demanding that popular companies pay more to telecoms just for being popular is an inherently stupid idea, but it’s been dressed up by telecom lobbyists as serious adult policy under terms such as “sender pays” or sometimes “Sending Party Network Pays” (SPNP). I’ve been dumbfounded by how these proposals have been treated as serious policy.

The efforts always begin with false claims that companies like Google and Netflix are somehow “getting a free ride” on the internet, despite spending billions in bandwidth, CDNs, undersea cables, and cloud infrastructure. From there, they usually involve some flavor of false claim that this model will help expand broadband availability to those in need. But its only real function is to fatten telecoms’ purses.

Like many countries, Korean regulators largely favor just three big major ISPs, which then influence policy determinations to an extremely lopsided degree. This muted competition, combined with regulatory capture, plus the SPNP model, has driven up costs for Korean consumers (see Michael Nelson’s good 2021 piece on this, or this 2022 Techdirt story by Konstantinos Komaitis).

Now, regulatory capture is driving edge companies out of business, and driving up both bandwidth and content costs for consumers. It’s all predatory nonsense created by regulatory capture and corruption, and the telecom policy marionettes pushing the idea aren’t operating in good faith. They’ve hijacked regulators to implement systems that deliver telecoms billions of additional dollars for doing nothing.

And if you think this is only happening in Korea, it’s not. It’s been an ongoing debate in the EU, where telecoms have floated a direct tax on any company that accounts for more than 5 percent of a telco’s average peak traffic. Here in the States, FCC Commissioner Brendan Carr (R, AT&T) has been a big proponent of the idea for several years now.

Again, it’s basically telecoms trying to get paid twice for the same (often substandard) service. That it has been dressed up as a serious policy proposal is embarrassing. California’s net neutrality rules ban such practices, and if they’re worth anything, the FCC’s soon-to-be-restored rules will as well.

Filed Under: fcc, lobbying, net neutrality, open internet, regulators, sender pays, sening party network pays, south korea, spnp, streaming, telecom
Companies: amazon, twitch

Meta Correctly Calls The EU Plan To Impose A Broadband Tax On ‘Big Tech’ Arbitrary Nonsense

from the please-pay-us-billions-of-additional-dollars-for-no-coherent-reason dept

Mon, Apr 3rd 2023 05:18am - Karl Bode

In case you’d missed it, the EU is currently proposing a telecom-industry backed plan to effectively tax Big Tech companies, and throw that money at Big Telecom companies for broadband expansion.

On the surface, the proposal is part of the EU’s efforts to craft digital policies for the next few decades, with an eye on shoring up lagging broadband access.

In reality, the effort is a lobbying gambit by telecom giants looking to offload their network deployment and maintenance costs onto somebody else. All being pushed by EU Internal Market Commissioner Thierry Breton, himself a former CEO of France Telecom.

It’s effectively an extension of the net neutrality wars, in which telecom monopolies insisted they should be paid even more money if you want to access their networks — for no coherent reason.

We’ve repeatedly noted there are several problems with the proposal. One, the whole effort is based on the lie that Big Tech companies “don’t pay their fair share” for broadband (in reality they pay countless billions for bandwidth, cloud storage, CDNs, transit, and even undersea cables). Two, it’s being driven by telecom monopolies with long, rich histories of bullshit on this subject (not to mention subsidy fraud).

It’s effectively yet another effort by the telecom lobby to “double dip,” dressed up as a serious, adult policy proposal. But throwing billions of dollars at telecom monopolies (without reforming existing broadband subsidy programs) in the hopes that this just magically fixes the digital divide this time is a fool’s errand. Yet here we are, having learned nothing from decades of policy experience.

Both Google and Netflix have come out swinging against the EU’s Big Tech tax, pointing out how the claim they “don’t pay their fair share” and should be directly responsible for paying to bridge the digital divide is telecom industry nonsense.

And now Meta’s Kevin Salvadori, VP of Network, and Bruno Cendon Martin, Senior Director of Wireless Technologies, have issued a blog post also pointing out that Facebook has spent more than $100 billion of capital expenditures and operational expenditures on global digital infrastructure:

proposals by some European telecom operators to impose network fees on Content Application Providers (CAPs) such as Meta are not the solution. Network fee proposals are built on a false premise because they do not recognise the value that CAPs create for the digital ecosystem, nor the investments we make in the infrastructure that underpins it.

Facebook/Meta has no shortage of dumb problems (including clumsy and sometimes predatory missteps on efforts to shore up global broadband access), but they’re correct here.

While broadband subsidy programs in the U.S. and EU do need shoring up, that shouldn’t necessarily be the job of Big Tech companies. Especially given that, in both the EU and U.S., telecom monopolies have routinely driven up the cost of essential broadband access for everyone through regulatory capture and relentless attacks on disruptive competition.

When it comes to telecom monopolies, nobody gets a “free ride.”

Some groups have warned that the EU’s telecom industry’s plan to tax Big Tech giants would simply drive up online costs for consumers, given Big Tech companies would just pass these added costs on to users already paying an arm and a leg for bandwidth. Some groups have warned the internet could also become less stable as online companies try to reroute their traffic around such fees.

Content companies and consumers already pay an arm and a leg for bandwidth due to corruption, regulatory capture, and monopolization. It’s the telecoms’ responsibility to use that money — in addition to the billions in taxpayer subsidies they already get — to ensure their networks are ready for customer bandwidth demands. Suggesting it’s Netflix’s fault because you weren’t prepared is preposterous.

Again, if policymakers were serious about bridging the digital divide, they’d embrace policies that take aim at concentrated telecom monopoly power. They’d reform telecom subsidy programs that, for decades, have thrown billions of unaccountable dollars at these monopolies in exchange for networks that are always only half completed. And they’d more seriously police fraud by major telecoms.

Forcing tech giants to pay telecom giants billions of dollars for no coherent reason isn’t actually a solution for the digital divide, but telecom lobbyists have convinced many captured regulators otherwise. And if the push in the EU is successful, you can be absolutely assured it will see a renewed push in the U.S. by the likes of AT&T and Comcast, with captured regulators like the FCC’s Brendan Carr at the fore.

Filed Under: big tech, digital divide, eu, high speed internet, lobbying, net neutrality, regulatory capture, sender pays, telecom, thierry breton

Netflix Fights Big Telecom Plan To Impose ‘Big Tech Tax’ In EU

from the hey-everybody,-I-have-a-stupid,-self-serving-idea! dept

Tue, Mar 7th 2023 05:22am - Karl Bode

Big Telecom lobbyists have been working overtime in both the US and EU, trying to get policymakers to force Big Tech to pay them billions in additional subsidies for no coherent reason. We’ve noted for several years how the push is self-serving bullshit by anti-competitive telecom giants, yet thanks to their lobbying influence, the effort shows no sign of slowing down.

The push is currently hottest in the EU, where the European Commission is taking public input on their plan to force online platforms to pay for telecom giants’ broadband network upgrades and expansions.

Netflix has been understandably resistant to the plan. Netflix co-CEO Greg Peters told EU leaders last week that the telecom industry is effectively trying to double dip:

Broadband customers, who drive this increased usage, already pay for the development of the network through their subscription fees. Requiring entertainment companies—both streamers and broadcasters—to pay more on top would mean ISPs effectively charging twice for the same infrastructure.”

The telecom industry’s effort to tax “Big Tech” always involves some variant of the claim that popular tech services are getting a “free ride” on the Internet, so it’s “only fair” that they help pay telecom giants for broadband expansion. Regulators have found that’s simply not true, given tech companies and platforms routinely spend billions on their own bandwidth and infrastructure, ranging from content delivery networks and transit routes to undersea cables.

Organizations like the EU’s BEREC have acknowledged as much in reports, noting that imposing an additional troll toll (often called “sender pays” by the telecoms) would likely cause market harm and drive up costs for consumers. From a 2022 report:

“The ‘sending party network pays’ (SPNP) model would provide ISPs the ability to exploit the termination monopoly and it is conceivable that such a significant change could be of significant harm to the Internet ecosystem.”

But just as in the U.S., politicians are so beholden to telecom giants (in part due to their “patriotic” assistance in domestic surveillance efforts) the effort never seems to die. And sometimes even succeeds.

Telecoms in South Korea convinced the government to implement this kind of model and its been a hot mess, with Netflix even being sued by one ISP simply because Squid Game was popular and resulted in bandwidth consumption spikes. But again, everybody in this chain, from Netflix to the broadband consumer, pays significant money. Nobody gets a free ride. Telecom monopolization isn’t gentle.

Telecom subsidy programs in both the U.S. and EU are in desperate need of reform. The contribution base for programs like the USF (into the U.S.) is shrinking, and telecoms have a very long history of taking billions of dollars for telecom upgrades that are then routinely only half-delivered. The broadband mapping data we use to dole out that money is also painfully inaccurate, making the abuse worse.

Any meaningful effort to fix this problem should probably first target reform of the subsidies telecom giants already get. Instead, politically influential telecom companies have convinced captured regulators in the EU (and U.S.) that taking billions in additional dollars and giving it to the telecoms (without meaningfully reforming the underlying programs) is the best path forward.

That’s not to say there can’t be a future where tech giants help contribute to broadband infrastructure, but this current push is nothing more than a multi-billion dollar handout to predatory telecom giants that have worked tirelessly for decades to crush competition and drive up rates. Rewarding them with billions of additional dollars makes no coherent sense, yet here we are.

Filed Under: broadband, digital divide, double dipping, eu, greg peters, netflix, sender pays, streaming, telecom, telecom tax
Companies: netflix

Dutch Officials Warn That Big Telecom’s Plan To Tax ‘Big Tech’ Is A Dangerous Dud

from the the-net-neutrality-wars-will-never-die dept

Mon, Mar 6th 2023 05:27am - Karl Bode

For much of the last year, European telecom giants have been pushing for a tax on Big Tech company profits. They’ve tried desperately to dress it up as a reasonable adult policy proposal, but it’s effectively just the same thing we saw during the U.S. net neutrality wars: telecom monopolies demanding other people pay them an additional troll toll — for no coherent reason.

To sell captured lawmakers on the idea, telecom giants have falsely claimed that Big Tech companies get a “free ride” on the Internet (just as they did during the U.S. net neutrality wars). To fix this problem they completely made up, Big Telecom argues Big Tech should be forced to help pay for the kind of broadband infrastructure upgrades the telecoms have routinely neglected for years.

It’s a big, dumb con. But yet again, telecom lobbyists have somehow convinced regulators that this blind cash grab is somehow sensible, adult policy. Dutifully, European Commission’s industry chief Thierry Breton (himself a former telecom exec) said last September he would launch a consultation on this “fair share” payment scheme in early 2023, ahead of any proposed legislation.

Hoping to steer Breton away from the idea, The European Internet Exchange Association, a coalition of key transit companies, recently warned that trying to sock tech giants with arbitrary polls would result in a less stable internet overall, as companies try to route their traffic around ISPs looking for an extra buck.

Similarly, Dutch Economic Affairs Minister Micky Adriaansens is warning Breton that tech giants will simply offload the higher costs of internet access to consumers (something we’re already seeing in South Korea where such a proposal has already been implemented at telecom lobbyist demand):

“It will penalise the consumers,” she told Reuters in an interview, saying that consumers who pay subscription fees to telecoms providers and also subscribe to streaming and video services may see the latter fees go up with Big Tech likely to pass on the internet tax.

Regulators worldwide are increasingly looking for ways to bridge the “digital divide” and shore up subsidy funding for broadband expansion.

But they’re often not looking at the real problem. Both in the EU and North America, regulators routinely and mindlessly let telecom giants consolidate and monopolize an essential utility. Those monopolies then work tirelessly to drive up rates and crush competition. And, utilizing their lobbying power, they’ve also routinely gleaned billions in subsidies for networks they routinely half-complete.

Serious reform would involve embracing policies that challenge monopolization, and engage in meaningful subsidy reform — ensuring that the billions we give telecom giants first actually go toward meaningful network improvements. Once you’ve done that, you can focus on additional funding mechanisms if they actually make sense.

Instead, EU regulators have decided to embrace a plan that involves Big Tech giving Big Telecom billions of additional dollars for no coherent reason. All while EU providers like Telefonica pretend that erecting these new troll tolls will result in “top-notch digital infrastructure” and are “key to our future quality of life, prosperity, and competitiveness.”

If the EU successfully implements such a scheme, you can be absolutely sure the next step will be the U.S., with captured regulators like Brendan Carr (who has been beating this idiotic drum for a few years now) at the front of the parade at Comcast’s and AT&T’s behest.

Filed Under: broadband, eu, fair share, high speed internet, sender pays, telecom, telecom tax, thierry breton

Big Telecom’s Quest To Tax Big Tech For No Reason Will Cause Massive Internet Instability, Group Warns

from the please-pay-me-billions-of-dollars-for-no-coherent-reason dept

Thu, Jan 5th 2023 05:21am - Karl Bode

It’s a big, dumb, con. But yet again, telecom lobbyists have somehow convinced regulators that this blind cash grab is somehow sensible, adult policy, dubbing it their “sender pays” initiative. Dutifully, European Commission’s industry chief Thierry Breton said last September he would launch a consultation on this “fair share” payment scheme in early 2023, ahead of any proposed legislation.

Tech giants like Netflix have tried to explain that this whole thing is just part of a longstanding attempt to force them to pay telecom additional money for no reason. Both Konstantinos Komaitis and K.S. Park also penned a good piece here at Techdirt explaining how these policies could have a profoundly negative impact on user and enterprise costs, broadband quality, and how the Internet functions.

The European Internet Exchange Association (Euro-IX), a coalition of core transit and interconnection telecom providers, have also now come out in criticism of the plan, saying it risks creating “systemic weaknesses” across the Internet in Europe.

More specifically, a letter from Euro-IX to European regulators argues that if you start forcing tech companies to pay “last mile” telecoms a troll toll, it will not only drive up the cost of streaming services for everyone, it could result in tech companies routing their traffic in such a way that it creates overall network instability as they sensibly seek to avoid being charged billions of dollars for no reason:

“The internet is a complex ecosystem, and it is policy-makers who are ultimately responsible for systemic effects resulting from policy choices,” wrote Bijal Sanghani, managing director of Euro-IX. Sanghani added that legislators should not prioritise “administrative rules [over] technical necessity or a high-quality internet” for those in Europe.

You don’t have to look far to see examples of how this kind of policymaking creates problems. Telecom giants in South Korea convinced regulators to impose regulations that open the door to this kind of troll tolls on tech giants. As a result, you’ve now got South Korean ISPs suing Netflix simply because television shows like Squid Game are popular, and there are higher costs all along the chain.

That’s of course not how the Internet fucking works. Users already pay their broadband provider for broadband access. And tech giants not only pay for broadband, they directly invest countless billions in cloud storage, transit routes, undersea cables, and in some instances (Google Fiber) their own residential ISPs. There’s absolutely no such thing as getting a broadband “free ride” in the U.S. or Europe.

I don’t like treating this stuff as an adult policy proposal because it simply isn’t. It’s bullshit slathered with a veneer of pseudo-engineering rhetoric just to trick captured and dumb policymakers and a lazy press. Consumers and tech giants alike in the U.S. and EU pay telecom operators countless billions of dollars more than they already should due to monopolization and constrained competition.

Those heavily subsidized ISPs then routinely use their power and influence to crush competition, stall deployment, and drive up service costs for everybody along the chain. Yet when you read through analysis of what’s being proposed in Europe, few, if any, participants can be bothered to even mention either the harm of monopolization, or the decades of outright subsidy fraud by telecom giants.

It’s a profound failure that the press, policymakers, and people in positions of influence aren’t clearly explaining that this is all a dumb, baseless con.

Yes, both the EU and U.S. need to find additional ways to creatively subsidize broadband expansion, especially to the marginalized communities long neglected by these very same telecom companies.

But taking money from tech giants (again, for no actual reason) then throwing it in the lap of an industry with a forty year history of anti-competitive behavior, subsidy fraud, and routine under-investment isn’t the answer. Hopefully the EU figures this out before it’s broader rules for the Internet are finalized later this year, but I wouldn’t count on it.

And I suspect if telecom companies succeed in the EU, you’ll see a similar renewed push in the U.S.

FCC Commissioner Brendan Carr (when he isn’t busy hyperventilating about social media companies he doesn’t regulate) has already been priming this pump for companies like AT&T for the last two years with a series of op-eds you’ll notice make all the same, dumb arguments.

Filed Under: brendan carr, broadband, con, digital divide, fcc, high speed internet, net neutrality, sender pays, telecom, troll tolls

The Global Trend That Could Kill The Internet: Sender Party Network Pays

from the corporate-subsidies dept

There is a Korean proverb that says: “There is always a way out, look for it.” South Korea’s recent revision of its Telecommunications Business Act (TBA) might, however, be the one thing South Korea is not able to get out of, unless it abandons its plans for redistributing the monopoly power back to telecommunication providers.

South Korea, just like Europe, faces similar challenges — an ageing population, and the need to compete in high-value sectors and create a digital ecosystem that is robust and facilitates economic and social growth. It is, therefore, quite ironic that both countries are considering policies that could put at risk and undermine much of the Internet and their digital futures.

The “Sending-Party-Network-Pays”(SPNP) proposal, currently at the center of the respective countries’ legislative agendas, is premised on a simple idea: content platforms that generate and send most internet traffic over the Internet should pay a certain fee to telecommunications providers in order to have those providers deliver that traffic to users. This model may make perfect sense in the telephony environment, where traditionally telephone operators have a termination monopoly for their customers; but, when it comes to the Internet, this proposal will prove counterproductive and dangerous as it creates bottlenecks for investment and degrades users’ internet experience.

We often hear that the internet is a network of networks. This is not a philosophical statement; rather, it means that, through voluntary agreements, networks decide independently with whom to interoperate while identifying ways to optimize connectivity in order to meet users’ demands. This ensures resilience and, at the same time, the robustness of the system. As a decentralized network, the Internet has no central authority or a gatekeeper to determine which networks can and cannot join, meaning that any network is able to autonomously participate, decide on which other network to interconnect and at what cost and become part of the global Internet. The only requirement is that it “speaks” the IP protocol language.

In 2013, a still relevant report by the OECD confirmed the success of the internet model in comparison to traditional telephony. “While national regulatory authorities have closely regulated circuit-switched (TDM) traffic exchange to achieve such policy goals as universal connectivity and competition, the Internet market has attained those same goals with very little regulatory intervention, while performing much better than the older markets in terms of prices, efficiency, and innovation”.

This fundamental design choice and the benefits it has produced are now getting ignored and the results are at best unpredictable and, in the long run, possibly irreversible.

In 2016, South Korea became the first country to enforce a “Sending-Party-Network-Pays” model, requiring ISPs to charge fees for the volume of traffic they were exchanging between them. Although enforced only among ISPs to date, it has already been detrimental to South Korea’s competitive market. With high fees being imposed, a number of South Korean and foreign content providers were left with only two options: exit the market or degrade their services. In the meantime, smaller Korean providers and a host of startups have to face insurmountable barriers to entry in the market.

For a long time, South Korean users have enjoyed fast and reliable internet connectivity and South Korea was an example other countries looked to for addressing issues of connectivity. Not any longer. According to a recent report, in South Korea, “regulation appears to have discouraged peering and investment […], leading to higher costs for ISPs, initially lower quality for users, and need for more regulation to correct unintended consequences.” In particular, in comparison to Europe, Internet access fee disparity skyrocketed to 8-10 times while, when it comes to the US, that figure was 5-6 times, causing many content providers to intentionally degrade their services.

Europe may have to face a similar reality soon should it decide to move forward with its own “Sending-Party-Network-Pays” model. Since March, when the European Commissioner for the Internal Market, Thierry Breton, announced the European Commission’s intention to move forward with such a plan, there has been widespread concern from a diverse set of actors across Europe. Civil society has condemned the proposal, specifically regarding the barriers to entry it will introduce as well as its potential impact on “freedom of expression, freedom to access knowledge, freedom to conduct business and innovation in the EU”. Similarly, the European Consumer Organisation has stated that “for consumers in particular, the risks or potential disadvantages of establishing measures such a SPNP system would range from a potential distortion of competition on the telecom market, negatively impacting the diversity of products, prices and performance, to the potential impacts on net neutrality, which could undermine the open and free access to the Internet as consumers know it today.” Similarly, Europe’s Mobile Virtual Network Operators (MVNO) group called for a “careful impact assessment”, while the European Association for Commercial Television and Video on Demand (ACT) urged European “institutions to thoroughly consider the wider implications before taking any actions that would directly or indirectly impact the stability and sustainability of the European audiovisual industry (and consumer rights) as a whole.

What could then be driving this fundamental shift both in Europe and in South Korea, especially given that the proposal has been rejected by everyone bar a handful of telecommunication companies?

Let’s think of this in terms of policy objectives. Telecommunication providers argue that a “fair contribution” scheme is needed for infrastructure and the need for both countries to meet their respective digital agenda targets. If this is really the case, however, then the starting point of the conversation is wrong. Throwing money to the largest telecommunication companies will not lead to infrastructure development so much as encourage monopolistic behavior and unpredictability. Considering that such deals will most definitely be confidential, it will also be hard for anyone to know the tradeoffs that will need to be agreed on every time. A pay-off will simply extend the termination monopoly telecommunication providers enjoy from telephone to content; it will not address any real infrastructure concerns.

To this end, a real infrastructure strategy might be necessary. In its preliminary assessment of the SPNP proposal, the Body of European Regulators for Electronic Communications (BEREC) said that, although “debate about network investments, traffic volumes and cost drivers needs to be carefully analysed”, at the same time, “the internet has proven its ability to cope with increasing traffic volumes, changes in demand patterns, technology, business models, as well as the (relative) market power between market players”. The focus, therefore, should be on services that facilitate user experience and enhance the resilience and stability of the Internet, including Internet Exchange Points (IXPs), Content Delivery Networks (CDNs), caches and the like.

Bad ideas tend to be solutions to problems no one really has. And, truly, there is no identifiable problem in the market of interconnection. The norms and rules that were set years ago continue to apply, ensuring connectivity. Europe must learn from the South Korean experience and avoid replicating mistakes that, in the end, will only harm its citizens and its digital future. As other countries, including the UK and India, are starting to flirt with similar ideas, the conversation about what sort of a digital future we want becomes increasingly pressing.

Konstantinos Komaitis, Internet policy expert and author & K.S. Park, Professor, Korea University, Director, Open Net

Filed Under: competition, eu, greed, korea, sender pays, south korea, spnp, telcos, thierry breton