The CEO of 13 major European telecom operators, including Deutsche Telekom and Vodafone, has issued a joint statement. In a statement, they said large tech platforms generate huge network traffic and are growing. They make a lot of money from this growing traffic, but they let the telecom sector make continuous, massive network investments and planning. They believe that in order for EU citizens to continue to enjoy the fruits of the digital transformation, these large technology platforms will also have to reasonably pay for a part of the cost of building their digital networks.
This is not the first time that telecom operators have pointed the finger at Internet giants, but it is rare for 13 operators to join up. Similar problems have appeared in many countries. What is this implication for domestic operators?
Zhang Yi, CEO of IMedia:
Should the Internet giants pay for the cost of telecom operations?
In fact, telecom operators and Internet companies have a long history of cost-sharing controversy. As early as around 2010, when the global mobile Internet users soared, in Europe, North America, China and other regions have caused fierce contradictions. But because of the huge incremental Internet traffic revenue at the time, the telecom operators’ revenue problems were not so prominent, and the relevant controversy was gone.
So why is the conflict between the two sides so serious? First of all, it can be attributed to the mobile Internet user growth in the world’s major economies has reached the upper limit, and when the unit traffic rates cannot be greatly increased, the revenue of operators will also reach the upper limit. Secondly, looking back to the telecom network itself, the current popularity of 4G network can basically meet the daily traffic needs of C-end users, and the sense of urgency for the 5G network with higher charges is relatively weak. Under the circumstance that neither raising the price substantially nor obtaining the user increment, the huge investment in the construction of the new network will inevitably cause the thinking of financial pressure.
In addition to the collective criticism of European operators, it will not ban us to reflect on our own body. Will Chinese telecom companies and Internet top companies also face similar disputes?
Compared with European countries, China’s telecom industry has developed rapidly and has taken the forefront of the world in recent years. At present, China is experiencing a new period of upgrading from 4G network to 5G network, and the telecom operation and construction expenditure has increased significantly. As a social inclusive infrastructure, 5G construction strategy is of great significance, but the huge investment in the basic network and the uncertainty of the return cycle have been highlighted. In this case, if only the state-funded construction, the pressure on fiscal expenditure will also suddenly increase. So is it feasible to choose to let the Internet head enterprises to pay part of the network construction costs?
It is no denying that Internet enterprises are the biggest and most direct beneficiaries of national network construction. For a long time, the Internet enterprise with the development of mobile communication industry and rapid rise, obtained the huge traffic dividend and economic benefits, also virtually also expand the traffic demand, increased the operation of the telecom operators construction costs, to share the cost of network construction logic in the industry does have certain rationality. But as for the final implementation of this idea, it may need relevant government departments to make overall planning.
In general, it is reasonable for Internet giants to share telecom operating costs, and the debate will not stop in the short term. However, since the telecom industry is an important basic fact concerning the national strategic layout and high-quality economic and social development, people are discussing the operating cost problem, basic telecom operators, Internet enterprises, and the national level. I believe that there will be a reasonable solution after the collision of all parties.
Independent observer Cheng Hui:
The new voice of capital behind the new variables
At the current time node, two new variables appear in the industry.
First, 5G construction began. Equipment input, operation electricity…………… overall network construction costs doubled.At present, there is no particularly clear global business model, and the overall industry profits are coming under downward pressure. Operators are looking for any means and ways to reduce the cost of network construction.
Second, the outbreak of COVID-19. The epidemic has clearly accelerated the digitization process of the whole society. In this digital process, the head Internet company gathered a large number of users, development growth. With this contrast, although the foundation is the basic information network, the operators are not in the traditional language, traffic and other businesses, get too big breakthrough.
The CEO of 13 European operators represent the voice of the capital behind them. Capitalists spend money, generated profits in the whole industrial chain, but did not receive their own pocket, of course, not. From this logic, it is reasonable for operators to require large Internet enterprises to share a part of the network construction cost.
What about that in China?
Construction of new infrastructure, represented by 5G is being accelerated. Starting in 2021, China Mobile and China Radio and Television will begin to jointly build a 700M network, which will further address the coverage of rural and remote areas. All of these, let us be running on the car (app), the experience will be optimized, the sense of gain will be enhanced.
China Mobile, China Unicom, China Telecom, China Radio and Television, are all central enterprises. The state is making great efforts to accelerate the construction of new infrastructure represented by 5G, with central enterprises as the leader. The Ministry of Industry and Information Technology has officially released the “14th Five-Year” Information and Communication Industry Development Plan “, which has very clear requirements and guidelines.
What are the characteristics of the central enterprises? It is the explicit embodiment of the country to assume its own national responsibility, the main grasp. During the epidemic last year, students all switched to online classes. There is a little girl in Qamdo, Xizang Province, the village signal is not good, she can only climb to the top of the snow mountain to listen to online classes every day. China Mobile specially went to build a base station for the little girl’s village. This is something that can be said from business logic. This is the social responsibility of the central enterprises. And as we know, this is not alone.
Such the popularization of the national information infrastructure construction, but also achieved large Internet enterprises. But its fundamental is for the development of the country, self-reliance and self-improvement of science and technology, and for the better digital life of the people.
After enjoying the dividends of the country’s new infrastructure, Internet companies have absorbed a large number of users and formed a monopoly in a certain market. So what about the next step?
The pure capital operation that set, with users and self-respect, a treasure block a certain degree of search, a letter block a treasure link, monopoly market recapital operation, to obtain more “violent” profit. Put it here to deduce, the position is wrong. Just like Zhou Xiaochuan said that digital currency: financial innovation is the means, the purpose is to serve the real economy, can not put the cart before the horse; authoritative media evaluation of community group buying: do not just think about the flow of a few bundles of cabbage, a few pounds of fruit, the stars of science and technological innovation, the infinite possibilities of the future, in fact, more exciting.
Of course, the industry has an early to mature process. We should see things from a developmental perspective. When the information and communication industry develops today, how should we deal with the relationship between cars and roads? Should operators charge network construction fees from large Internet enterprises?
Infrastructure construction is state assets, this is not a simple answer a receive, or not accept. The relevant departments of the state need to fully investigate and study, legislation and regulations, there are laws to follow. This is the compliance operation, the rule of law.
Internet companies, obtaining data from the society, produce, services and products, make themselves and their enterprises. On the one hand, share the benefits with the data provider, at least protect user privacy. On the other hand, it can consider adjusting the distribution mechanism within its own capacity to improve the income and treatment of service objects, such as the performance service fee of food delivery companies and the percentage of online ride-hailing companies.
Wu Xia, a legal observer of the communications industry
Scientific allocation of resources and factors to promote the sustainable health of industrial ecology
As of October this year, the number of mobile Internet users has reached 1.416 billion, and the access to mobile Internet traffic has increased nearly 40 times in the past five years, according to the Ministry of Industry and Information Technology Statistics Bulletin. However, the surge in information and communication demand has not brought substantial profits for telecom companies. Under the background of the intensive deployment of new infrastructure, the promotion of universal telecom services has brought huge resource investment, and the implementation of frequent large-scale speed increase and fee reduction, operators are faced with the embarrassing situation of not increasing their business increment. At the same time, Internet enterprises based on the upgrading and iteration of network equipment, accelerated application product innovation, ushered in rapid growth, obtain huge profits, 4 entered the Fortune World 500 list, accounting for more than half of the number of Internet enterprises on the list, compared with the difficult survival of operators, it can be said that ice and fire. Recently, 13 European telecom operators jointly asked Internet companies to share the cost of network construction, putting the inverted value creation problem of two types of companies relying on the same network on the table.
The imbalance of the rights and obligations between Internet enterprises and telecom operators is the underlying logic of sharing the network cost. From the legal perspective, the commercial transaction relationship formed between the Internet and telecom enterprises is different from the telecom services enjoyed by ordinary users through network access agreements, and it should be more focused on the fair distribution of rights and obligations. Network is the lifeline of operators and many Internet enterprises. Its profit model all benefits from providing network service products. With the acceleration of the digital transformation of the economy and society, the two have formed a cross-competitive relationship in the emerging application fields such as cloud computing, the Internet of Things and big data.
From the perspective of power obligation configuration, the Internet enterprise to build large traffic products, directly earn membership fees, advertising, business sharing, and many other benefits, and accumulated huge amounts of user data, value is immeasurable, but no need to pay for traffic, only at low cost to buy bandwidth line telecom services, to enjoy speed JiangFei information huimin results and other commercial enterprises.
On the other hand, in order to support the surge in demand for applications, operators should pay trillions of investment in network construction, support high operation and maintenance costs, and increase investment in new technology research and development to continuously improve network quality and performance. In addition, with the acceleration of legislation in the data field, the Network Security Law, the Data Security Law, the Personal Information Protection Law, and the regulations on the protection of key information infrastructure have been issued, and operators will assume more resource input and compliance obligations in increasing network information security. The South Korean court ruled that Netflix, a US video service provider, was paying for network costs, and the recent rise of European operators reflects the imbalance of power and obligations.
Scientific allocation of resource elements is the basic premise of the sustainable health of industrial ecology. Under the guidance of unified industrial policy, telecom enterprises are often positioned to provide public services, the Internet enterprises “water fish” in line with the early development law of digital economy, but with the digital industry, digital industrialization process accelerated, free occupy a large number of public resources if not to change, may be “dry ze and fishing”.
To change the imbalance situation, will reconstruct business relations under the framework of the rule of law, return to the market economy fair trade, play a decisive role of effective market in the allocation of resources, promote both on the basis of equal consultation, innovative flow pay, customers share cost, such as sharing benefits trading mode design, objectively reflect the value of resource elements, to achieve a mutually beneficial and win-win benign cooperation. At the same time to strengthen the regulatory role, through the rule of law means to guide and guarantee resource allocation mechanism efficiency, clear development orientation and boundary, play their respective advantages of upstream and downstream industrial chain, promote collaborative cooperation fu can assign industrial transformation and upgrading, form the powerful kinetic energy of digital economy development, promote network China, digital China, wisdom society vigorously forward.
Yun Qing, an independent telecom analyst:
Net neutrality should not be viewed dogmically
Telecom operators and Internet enterprises, in the pursuit of industry interests, have been playing games in the “net neutrality” policy field.
The chief executive of Deutsche Telekom, Vodafone and 11 other major European telecom operators have recently said that U. S. tech giants should bear some of the cost of deploying European telecom networks because the companies use the European telecom networks frequently. Such a move can be understood as a new environment for telecom operators to take a new game measures.Such discussions will also put the controversial “open”, “neutral”, infrastructure construction and sharing issues on the table.
Government regulators have different understandings of the balance point of net neutrality policy. The US government in 2015, for example, adopted the so-called ” the toughest proposal for net neutrality in history. These include: 1. Transparency. Broadband service providers must disclose network management practices, operating conditions, and broadband service terms; 2. No blocking. Fixed broadband service providers shall not block legitimate content, applications, services or devices that do not harm others, and mobile broadband service providers shall not block legitimate websites or have voice or video services competing with them; 3. Unreasonable discrimination is prohibited. Broadband service providers may not discriminate against legitimate network traffic.
However, with the rapid development of the Internet industry in recent years, the American telecommunications market, like most telecommunications markets in the world, has entered an era of “pan-telecom competition”, and the business scope and competition field of Internet enterprises and media enterprises have undergone great changes. For example: In addition to its main business, Facebook has made developing network infrastructure capabilities through innovation an important expansion direction. In this area, Facebook takes full advantage of its several advantages: its detached status from traditional telecom supply chain systems, its strong influence, and the ambition to transform its network architecture. These advantages give it a reputation as an influential partner and project in a short time. Facebook’s use of the Internet to build a future-oriented infrastructure network, coupled with its huge position in the application, poses a huge threat to traditional telecom operators.
Such changes, in turn, would prompt the US government to take measures on net neutrality to restrain Internet companies and balance the balance. This includes the FCC shutdown, which allows operators to offer users streaming content, including music and video, without charging any traffic fees. As a result, carrier products like DirecTV Now (bundled packages for traffic and video content) can hit the business model of Internet companies.
The adjustment to the “net neutrality” policy reflects the government’s consideration: increasing the construction of infrastructure networks needs to take into account the interests of all parties involved to ensure that all parties have enough enthusiasm.
Net neutrality involves two types of enterprises with vertical upstream and downstream relationships in the communication and information industry value chain: “network access operators” and “content or business providers or other communicators”. With the penetration and development of telecom operators and Internet enterprises in their respective business areas for the purpose of mastering stronger control, the relationship between the two enterprises has long been simply defined as the upstream and downstream enterprises. So the change in net neutrality policy is a redefinition of the regulatory environment caused by the new politicians ‘differences in their understanding of the industry’s roles, developments, and future business trends. Under such circumstances, it has become a logical choice for telecom operators to strive for a better living environment for their own industry role through collective solidarity. At the same time, if the game can form a reasonable positioning, the interests of various roles may also be taken into account. There was a similar net neutrality controversy when wechat emerged in 2013. At that time, the operators thought that wechat occupied a large number of network signaling resources, and provided it to customers for free, which caused a huge impact on the traditional SMS and MMS market of the operators, and then put forward the hope to charge the wechat differently. Seemingly difficult to reconcile at that time was the great development in the operator traffic market, and digital services and content services formed new transformation opportunities. Wechat brought users’ digital use habits, but promoted the development of the data market.
Perhaps, net neutrality should not be viewed dogmatically. With the development of different roles of the industry, a flexible control mechanism is designed to better promote the development of the industry.