European telcos look to US tech giants for infrastructure deals

Time for U.S. tech firms to pay the piper, or at least for the pipe, say more than a dozen Euro telco CEOs

The heads of Vodafone, Deutsche Telekom and 11 other European carriers called on U.S. tech giants to help pick up the tab for 5G, fiber and cable network buildouts. The network traffic U.S. services generate requires massive infrastructure investment — infrastructure they must pay for if they expect to use, the CEOs said in a joint statement seen by Reuters.

“A large and increasing part of network traffic is generated and monetized by big tech platforms, but it requires continuous, intensive network investment and planning by the telecommunications sector,” read the statement.

The European telco bosses called on unspecified U.S. tech companies to pick up part of the billions of euros they expect to spend in the coming years to improve telecommunications infrastructure. 

“This model — which enables EU citizens to enjoy the fruits of the digital transformation — can only be sustainable if such big tech platforms also contribute fairly to network costs,” said the CEOs.

Paying for future infrastructure growth

Carriers can expect to earn about $3.7 trillion of the 5G consumer market by 2030, according to Ericsson, giving them a sharp incentive to upgrade. That number could rise sharply as operators bring new adjacent services to market. The industry’s growing pains include the pivot to 5G Core networking and the move to virtualized network functions and cloud-native functions. 

The telecom infrastructure market is heating up. Industry observers during WIA’s virtual Connect(X) Capital and Finance Summit said that scaled-up infrastructure spending was the result of massive changes in remote work and digitalization efforts enterprises made during the pandemic. 

Operators are desperate to break out of the dumb pipe model, and want the businesses which have benefited the most from the current state of networking to help pay for the next big phase.

U.S. tech firm infrastructure bandwidth piggishness wasn’t the only issue on the CEOs’ agenda. They also railed against the steep cost of government-run spectrum prices and auctions. Governments rely on them for massive windfalls from the private sector, but the scale and cost force the market to be unsustainable, according to the statement.

The CEOs stopped short of naming specific U.S. tech firms in its statement. Video streaming, social networking and web browsing remain top drivers of mobile Internet traffic, according to a recent report from Sandvine

In addition to DT and Vodafone, adding signatures to the letter are the CEOs of Telefonica, Orange, KPN, BT Group, Telekom Austria, Vivacom, Proximus, Telenor, Altice Portugal, Telia Company and Swisscom.

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