‘No taboos’ over mergers in EU telecoms shake-up, says Breton

There will be “zero taboos” when the European Commission examines making Big Tech pay telecoms groups for their network rollout and whether to loosen rules around cross-market consolidation, EU commissioner Thierry Breton said.

Speaking at the global telecoms conference Mobile World Congress in Barcelona, Breton, who oversees the EU’s internal market, warned the industry’s business model would have to undergo a “radical shift” as he set out a broad 12-week consultation on telecoms infrastructure.

He added: “It is time that we have a serious discussion about the possible existing obstacles to cross-border consolidation” which he sees as “holding back our collective potential compared to other continents”.

The review has been widely viewed as a referendum on whether Big Tech and video streaming companies should be made to pay a “fair” contribution to telecoms groups for the billions they are investing in rolling out full fibre and 5G networks.

While tech companies have long resisted what proponents term a “fair contribution” to network costs, there have been signs that regulators in both Europe and the US are becoming more favourable to the argument.

Breton insisted on Monday that it was “not about whether one vested interest should prevail over another” but instead about “achieving the giant leap for connectivity ahead of us”.

Deutsche Telekom, Orange, Telefónica and Telecom Italia have intensified their lobbying efforts, pointing out that tech platforms account for more than 50 per cent of traffic carried over networks and yet pay a much smaller contribution to the infrastructure underpinning them.

Netflix and Google have recently become more vocal in their opposition to the proposals, arguing that they already contribute generously to internet infrastructure by investing in data centres and subsea cables, as well as developing the services that customers want to use on smartphones and computers.

They also say the proposal undermines the principle of “net neutrality”, which prohibits broadband providers from throttling any users’ access to the web.

Asked whether he would look at the question of allowing more in-country consolidation among telecoms operators — something long called-for by companies across Europe — Breton said the consultation is “very open” and “nothing is taboo”.

Pietro Labriola, chief executive of Telecom Italia, told the Financial Times: “If we win the fight for fair share but we’re not allowed to consolidate, that would not resolve the fundamental problem.”

He added that the commission’s consultation indicated that “something different is finally happening”, adding that Breton “understands the challenges” of the sector because he used to be a telecoms executive himself.

Breton was chief executive of France Telecom, now Orange, until 2005.

“There is a difference between theory and reality, and he understands reality,” he said. “If you look across Europe today, everybody is in trouble, everyone is looking for market consolidation, everyone is seeing they have no more profitability. If you want a telecoms sector in Europe you need to intervene now.”

Christian Borggreen, senior vice-president of the Computer & Communications Industry Association, which represents the interest of tech groups, argued last week that “putting a fee on internet traffic would hurt European consumers and undermine the open internet by treating data differently”.

He called on the commission to “reject this misguided idea once and for all.”