Internet traffic tax: why telecom companies should tell EU lawmakers what to tell their investors

European telecom operators Claim This growth in Internet traffic has created a situation where they cannot generate a “viable” return on network investment. The solution, they say, is to demand payment – not only from end users, but also from popular tech companies that send data in response to end users’ requests. At least that’s what telecom lobbyists are telling European politicians and lawmakers. But do their financial reports to shareholders show a different story?

at recent days messagethe executives of Telefónica, Deutsche Telekom, Vodafone and Orange, have argued that online gamers must contribute financially to network upgrades if Europe is still to reach its ambitions. Communication goals. This ignores the fact that tech companies are actually already investing heavily in infrastructure, think for example Google submarine cables or Netflix Investments In Open Connect CDN. However, the communications campaign appears to have prompted the European Commission to consider whether or not there is a need for regulatory intervention.

But it increases internet traffic Is growth really the intractable problem that carriers claim it is? A recent study by Communication rooms otherwise found; Arguing that the demand for Internet traffic is actually driving revenue for telecom companies, for example through fixed lines, including fiber cable, and rolling mobile data charges.

This may explain why carriers are trying to attract data-hungry customers by Use Broadcasting services to promote their own shows. If the data traffic is really unmanageable or undesirable for them, surely the carriers won’t actively target this specific customer segment?

It should also be noted that traffic growth is not increasing as dramatically as is generally believed. Instead, communication rooms have found That data growth has actually declined – for both fixed and mobile access – in recent years (apart from the short-lived spike during lockdowns). If growth in data traffic is already driving telecoms revenues, perhaps they should be more concerned by reducing the demand for data traffic (which the tax on internet traffic would cause)?

Telecom operators’ latest financial reports do not portray a sector in such a dire situation that they justify their attempt to rent from other industries, and increased internet traffic is eroding their financial performance. On the contrary, Vodafone Group CEO Nick Read said in May that they “performed well financially for the year with growth in revenue, earnings and cash flow, in line with our medium-term financial ambitions.” Vodafone mentioned he won 2.6 billion for the fiscal year.

phoneica mentioned It “accelerated its growth in the first quarter of 2022, recording an increase in revenue in all of the company’s markets as reported, and a net income of 706 million euros.” while, orange It said it continues to “reap the benefits of our European leadership in fiber and 5G with a 2% increase in our retail growth in the first three months.”

Similarly, after a strong fiscal year 2021, Deutsche Telekom continued its growth in the first three months of 2022. Revenue increased 6.2% to €28 billion, with service revenue growing 10% faster, the German operator boasted. that it 2021 net profit 5.9 billion euros. Christian Elek, Chief Financial Officer, Deutsche Telekom He said When submitting quarterly numbers.

In fact, carriers share very different messages about their ability to invest in networks depending on who is listening. Speaking to EU lawmakers, traffic growth is an insurmountable burden, but in earnings calls with shareholders and investors, traffic growth appears to be the main driver of growth. Because unlike talking points in lobbyists, companies are subject to transparency obligations when reporting their financial position.

Telecom companies should start telling EU lawmakers the same story they share with investors: the fact is that exciting apps and online content are driving demand for telecom operator services, which in turn generates more revenue. Thus, taxing internet traffic means taxing what telecoms companies and Europeans want more of.