Breton’s view of EU geopolitics in the telecom sector vis-à-vis China, US

Commissioner Thierry Breton supported the need to find a financing model for investment in the EU telecom sector and advocated for more control and security in its infrastructure in view of the sector’s growing geopolitical significance and competition with the US and China.

Breton, the EU commissioner for the internal market, shared his view on the new telecom act, the Digital Networks Act (DNA), which should redefine the EU’s telecom geopolitics, after the European Commission officially published the results of an exploratory consultation on the future of telecommunications on Tuesday (10 October).

“As a global tech race is taking place […] we need to ensure that our networks are up to the task in terms of transmission speed, storage capacity, edge/computing power, and interoperability,” the Commissioner wrote.

Breton’s statement was analysed by the telecommunication organisations GSMA and ETNO, who said they consider it as pushing for “finding a new financing model” for telecom operators and “acknowledging the strategic value” of telecoms from a digital sovereignty viewpoint.

Alessandro Gropelli, deputy director general and board member of ETNO told Euractiv that “fair share” was one of the answers for EU telecom operators to “fix the relationship between [EU] regulated small telecom companies and [US] Big Tech”.

The Commission announced on 15 June that restricting or excluding Chinese companies “Huawei and ZTE from 5G networks are justified”, because they “represent in fact materially higher risks than other 5G suppliers” for the telecom infrastructures of the EU.

“Fair share”: the tax fighting US Big Tech

GSMA and ETNO welcomed Breton’s commitment to “finding a financing model for the huge investment needed” in the telecom sector, in an allusion to the debate of the senders-pay principle (also called “fair share”), according to which the largest traffic generators should chip in on infrastructural investments.

This would eventually lead to indirect taxation of American Big Tech like Netflix, Google, Amazon or Meta (the parent company of Facebook, Instagram, and WhatsApp).

Yet, Daniel Friedlaender, the senior vice president and head of CCIA Europe, an organisation representing the interests of the aforementioned companies, concluded from the Commission’s exploratory consultation that “once and for all, this consultation proves that the vast majority of stakeholders agree: introducing network usage fees would be an unnecessary and damaging regulatory intrusion”.

Innocenzo Genna, a telecom legal expert, told Euractiv he also found that “the fair share proposal is losing momentum” from the Commission’s document because the consultation did not reveal large support.

The Body of European Regulators for Electronic Communications (BEREC) previously raised critical points on the fair share debate, and only two member states – France and Spain – expressed their support.

Other EU countries were not convinced about the need for such taxation, which they feared would result in a rise in subscription costs for EU users of American services, like Netflix users.

US telecom regulator throws his weight behind EU senders-pay initiative

Unpopular among European regulators, the European Commission’s idea of making Big Tech companies contribute to network costs has found an ally on the other side of the pond.

Last February, the EU executive presented a Connectivity Package with measures to speed …

“High-risk vendors”: fighting Chinese telecom infrastructure companies

“In the current interconnected world, with rising geopolitical tensions, we need to ensure full control over our decision-making processes in […] our EU connectivity infrastructure. The EU has come a long way in securing 5G networks,” Breton wrote on Tuesday.

The Commission decided to restrict or ban Chinese telecom infrastructure, particularly from Huawei and ZTE, in June, urging member states to do the same.

Yet, Genna told Euractiv that “the need to increase the level of security of networks is essential because everything happens here now” while sharing doubts about why Huawei and ZTE were singled out.

Searching for the EU way in the telecom sector

A senior telecom expert told Euractiv that the “fair share” tax and exclusion of high-risk vendors, which he warned “comes at a cost”, went hand in hand with a geopolitical EU telecom market.

Breton states there is a dire need to redefine the DNA of the EU’s telecom regulations, suggesting loosening the regulation of telecom operators.

Yet, this position is critically analysed by Cláudio Teixeira, legal officer at the independent consumers organisation BEUC who told Euractiv that “while Big Tech must be called out for the harms to the market and society as a whole, the solution is not to allow telecom operators to also become too big, too powerful and too few, at the expense of competition and consumer welfare”.

Looking at the other side of the coin, the European Competitive Telecommunications Association (ECTA) told Euractiv it believed in the EU success story of competition that is “fuelling investment, consumer welfare and innovation”.

ECTA, BEUC, and Genna shared the view that the EU should not consolidate its telecom market through giving more power to legacy operators (Vodafone, Orange, Deutsche Telekom) and renouncing its competition principle for geopolitical purposes.

ECTA concluded that the EU “should find its own way, strengthening its own values, as it did on illegal content online with the DSA [Digital Services Act], with digital antitrust laws with the DMA [Digital Markets Act], and with data protection with the GDPR.”

EU Commission bans Huawei, ZTE, urges countries to do the same

EU Commissioner Thierry Breton urged on Thursday (15 June) member states to use the prerogatives of the 5G Toolbox to restrict or exclude high-risk vendors and announced Commission measures to free its internal networks from Huawei and ZTE.

The second report …

[Edited by Alice Taylor/Zoran Radosavljevic]