Fair Share or an Internet Traffic Tax? The EU Telcos vs Big Content

1:36PM Mar 23, 2023

Speakers:

Desiree Milosevic

Judith Hellerstein

William J. Drake

Michael Kende

Eli Noam

Rudolf van der Berg

Maarit Palovirta

Hendrik Rood

Phillippa Biggs

Jonathan McHale

Keywords:

telcos

traffic

networks

europe

question

investment

eu

regulation

negotiations

internet

pay

costs

infrastructure

countries

operators

telecom

large

discussion

content providers

companies

People are using the network's content providers, applications providers capsule. There is in principle, nothing new and unusual about this situation of infrastructure versus users. It's always been there, the railroads and the farmers have floated over in the 19th century in the United States that actually led to federal regulation and state regulation of infrastructure, cable companies with the content networks that are constantly fighting over rates, electric transmission systems and power generators, gas pipelines. With gas producers, etc, etc. So, so usually, the market power lies with the infrastructure for kind of obvious reasons, large capital investments, higher, high economies of scale, etc. That leads to a very few monopoly over a handful of providers. And so usually the users have to be protected from monopoly pricing. There are some instances in which there might be but very rare, where there might be monopsony pricing where the user is so powerful that the infrastructure provider have to bend in that direction. And I was trying to think of some examples and I can't find good examples. One is the, in the old system, the postal service with the airlines, so they obviously they were a huge customer. For mail delivery type. And so they could dictate prices. So but normally, the price regulation of price intervention is to keep prices down, rather than to raise prices. So, in this situation here that we're talking about, we do have very strong, strong ASP companies, telcos etc. We do an a fairly concentrated industry. We also have a but we also have on the other side, a number of very large users. A cat large caps are Google, Facebook, etc. And so one would think that this is a situation where there's some bargaining power on both sides and therefore let commercial negotiations take do its job. But there's a third factor here and that is kind of that there is some externalities to infrastructure and governments have been kind of talked, thinking about kind of how can we upgrade our infrastructure? And so So that is certainly one way in traditionally, infrastructure is externalities. Externalities were sometimes given by cross subsidization of some sort, but sometimes direct subsidies from government. But here, I think some governments have also discovered a pocket there, which are the large providers of content and to some convenient cents for Europe politically, they tend to be American companies, maybe some Chinese companies. So in some ways, let's let's me and I will conclude now to question in a way is this part and I will say, these questions provocatively, is this a situation in a question?

Why should California based companies that have been small and innovative and then have become large and successful and have given the world a lot of kind of remarkable features? Why should these companies need to subsidize the accom infrastructure in Bavaria or Calabria? Shouldn't german or italian governments do so or German or Italian companies do so? Conversely, I would ask the question from the other side, which is, would California customers expect that a delivery of beer from Bavaria a wine from Calabria should travel through the United States for free? And so both of these questions are, in some ways, the questions that underlie the discussion that we will have today and it will be moderated by the organizer Bill Drake, who is CIT nice Columbia fatality information is Director of International Studies, is also a PhD in Political Science from Columbia. So he has come back in between he has done many interesting things in Washington, Georgetown University Carnegie Institute. He has been also with the University of California, San Diego, with the World Economic Forum in a variety of capacities. He's well connected, well informed about these issues, and I'm very glad to pass this on to Bill. Go ahead.

Thanks, Eli, for that interesting introduction. And actually, I'm more confused about these issues than anything else, but that's fine. Hopefully today is going to clarify everything for me. So this is part of a series on global digital governance that we've been running since October with monthly meetings. This is the fifth meeting. Our next meeting just to tell you it will be in four weeks on Tuesday, April 18. Certainly we're on Thursday, but actually we'll do a Tuesday one because I really will be at a UN meeting on Internet governance on the on the relevant Thursday. Today, we're going to be taking some time to dig into this whole battle that's taking place within Europe, which really has, I think, broader global implications that have not gotten sufficient attention. So some of this will sound very, you know, eu. I can't say inside baseball because that doesn't work. In the European context about inside football.

Soccer Soccer,

Soccer is not acceptable term in Europe anyway. But but hopefully people will see the broader significance. You know much of the energy in discussions these days around global digital governance is focused on new technologies like AI, crypto social media, etc. But there are a lot of long standing parts of the ecosystem that involve big money and extensive governance and international cooperation. And one of these of course is the rules for networks to distribute intermittent terminate traffic, especially at the international level. And in fact, I mean, this is my interests. You know, going back to the very beginning, the origins of international cooperation and communications really started with you know, the 1850 Treaty of Dresden and a lot of it had to do with setting the rules for interconnecting and handing off traffic and who gets paid for what. And of course, that was then followed through with all the subsequent international rules set in the International Telecommunication Union and other bodies. And this was, you know, the work in particular of national monopolies that were governmental entities, ministries of post telegraph telephone, PTTs. And later their private counterparts in weird countries like the US. And then in the 60s, we had the international accounting and settlement system which was even more ornate and its rules and bureaucratic procedures. But all of that was based on the notion that the sending party network would build a customer for outbound traffic and then make payments to the inbound network for transit termination. So send your senator party network pays SP NP was basically the broad concept. And this prevailed for a very long time until the late 1990s, when this kind of cartel uniformity was broken apart by liberalization, privatization of the PTTs, the entry of the WTO, to the space and so on. The Internet, of course, was always fundamentally different than the way it did things from the 1990s to the emergence of commercial Internet, large backbone carriers paired with each other tier ones to exchange traffic without negotiating compensation based on volume and just worked on system the sender keeps all the smaller ISPs paid for transit to reach the whole Internet. And of course, over time, the Internet topography evolved and changed with the arrival of Internet exchange points, and other means of collecting and distributing traffic, and then evolved even further with the growth of industry consolidation, the appearance of content delivery networks that flattened that and reduced the demand for transit, all kinds of things. But the point is that this model of Peering and Interconnection was key to the internet's uninhibited growth and role as a growth pole for innovation without permission. But this has become challenged today. This one's comparatively unexciting realm of interconnection has become the focal point of the huge global debate in the EU that may have significant implications for the world. European public telecom operators or telcos have been arguing for at least a decade. A compensation from their customers is not enough to do the investments they need to make in broadband, and they should receive compensation from the originators of Internet traffic. This question Shut up the agenda internationally in 2012. At the ITU is hugely contested World Conference and international telecom wicked in Dubai. 1000s of delegates, including myself gathered to debate the erosion of the International telecom treaty and decide whether what should be applied to the Internet. And it was quite a quite a battle I would say. And in that heated environment, the European telcos coordinated in et know the European Telecommunications Network Operators Association, proposed global treaty language saying, and I quote operating agency shall negotiate commercial agreements to achieve a sustainable system of fair compensation for telecom services and where appropriate, respect the principle the sending party network pays. This is the complete opposite of the traditional Internet interconnection kind of model. There were opposed by the body of European regulators for electronic communications in Europe, Eric, and global multistakeholder pro Internet coalition and ultimately, the proposal failed as did the whole negotiation was the biggest diplomatic catastrophe in the history of global communications. But anyway, now we have a renewed campaign, South Korea implemented a version of Senator party that repays in 2016 and a targeted Netflix law thereafter. And in 2021 2022, European telcos began to push again, to receive payments in exchange for terminating traffic focusing their fire particular on large content, application providers camps that happen to be based in the United States, from whom their customers request a lot of bits. And they've coordinated through ECMO and some other industry associations to advance this agenda. And the EU's digital Commissioner, and experience See, telecom CEO theory Reto has been a leading voice for digital sovereignty and a critic of us big tech, enthusiastically welcoming the proposal and other parts of the Commission have endorsed or seem very open to it as well. And some members of parliament, the European Parliament and civil society groups demanded more open discussion as to Berek the regulators. And so now we have going on right now 12 week public consultation that ends May 19, which is not just on this issue. It's a broader look at how Europe should configure itself in the digital environment. This is certainly an important part of it and engineer that was distributed as quite telco friendly, I would say, but it's it's a huge battle going on kind of a single issue mini wicket that involves all the players the Internet ecosystem, so it's very consequential and we want to explore it. And to do so we have a panel of leading expert participants in the debate, three people from Europe. First is Rudolph Vander Berg partner is stratics consulting the leading telecom and digital economy consultancy of the Netherlands. Previously, he was a regulatory affairs manager at tele two senior policy advisor at the OECD, management consultants consultant at logica management consulting and Policy Manager at the Dutch Ministry of Economic Affairs, Michael Kennedy is our he's joining from the Netherlands. Michael Kennedy is joining from Switzerland. He's a senior advisor for analysis Mason Consulting and a digital development specialist with the World Bank Group. Recently Michael was chief economist at the Internet Society and a visiting lecturer at the Graduate Institute for International Development Studies in Geneva. He is the author of several important white papers and IP interconnection as well as a book called the Digital handshake. And he couldn't he was a MIT economics PhD and knows the way this typography works. Well. Finally, Margaret Hello Hello. verta is Senior Director for regulatory affairs of the European Telecommunications Network Operators Association at no mentioned previously, we're very happy that she was willing to join us and explain the telco positions. Previously, she was a manager. He held management roles at the Internet Society and in Cisco Systems, and worked in a well known Brussels based consultancies. And she's coming from Belgium. So we'll do five or six rounds of questions to the throat, the tab and a little back and forth, hopefully and then we'll open it up to discussion. I see a lot of people in the room who know a lot about this arena. So hopefully we can have a good open discussion after the panel. That's the agenda. Let's dive in. So let me start with the first question. And I guess my record it makes sense for you to take the lead on this one. What are the core economic arguments being advanced by the telcos traffic patterns revenues, and in their investment requirements? Are the counter arguments of these points that have been advanced by opponents? What's the what's the core economic proposition we're dealing with here? Please go ahead and explain that to us.

Yes, thank you. Thank you, Bill. And Good Good morning to you, I guess in the US. Today afternoon, already hearing Europe and thanks a lot for the invitation for this event. I'm sensing that there's a lot of good topics to be discussed already. But indeed, I'll try and start with let's say the if you like the problem statement from our side, maybe just two words on ethanol before we start. So we were talking about a concentrated industry in the introduction at some stage and just to give you an idea of what the situation is in Europe. So at Aetna, we have 33 members operators who represent about 70% of the investment footprint in Europe. But due to the state of the market in Europe, we actually do have hundreds of operators in Europe, and you could say about 100, let's say good size operators. So the market is not perhaps as concentrated as it is in the US. But that aside, so going into the problem. So for us, this is really a problem about investment, and investment gap and return on investment from our point of view. And the challenge is really with private investments in telecoms market. So you may know that in Europe, we have quite a lot of public funding available, but that's not where we see the issue. And just to give you some idea on the investment numbers, so in 2021, operators in Europe invested some 56 billion euros on networks. And that was actually a record high since 2016. So you would think that things are going fairly well. But then when you look at the private investment per capita, and compare that with for example, the US so this only represents two thirds of the investment that you guys are having in the US are less than a half of the investment in Japan. And if we're continuing at the current pace of investments, we have an estimate that about 45 million Europeans will not have gigabit connectivity by 2030. And as you know, in the US, that's a clear political priority. And that's also the case here in Europe. So there's a coverage issue still in Europe, number one. So then when we start digging into the investment challenge, what is behind there? So maybe the first thing I would like to raise is the data traffic volumes and and this is of course, something that you know, has come up in the discussion a lot. We have seen an exponential increase in data traffic volumes. And we don't see from our side, you know, an end to this trend. We have great new content coming up new services, apps metaverse. And what have you, I higher definition video. So we expect that growth will continue. And because of this data traffic volumes, operators, of course have to continually invest also in capacity. So three dimension networks, upgrade networks, etc. And so here we come to the capacity issue. So there's a coverage issue, but there's also the capacity issue. And here's where you might say but hey, well you operators. So that's your job, isn't it? So you know, you should just make it happen. Well, ideally that would be the case, however in Europe and it was already referred to I think we do have quite a specific regulatory framing in the area of of telecoms. So, we are subject to regulation, including very specific pricing regulation. So telecom operators prices are regulated partially at the wholesale level, but also at consumer level. We have a competition policy that is quite clearly against mergers. So as I said, market is very fragmented and at the moment, we do not really see any possibility to increase economies of scale, let's say organically through mergers. And then we have the regulation on the open Internet, which is the net neutrality regulation, if you like. And while we of course endorse fully the principles behind the open Internet regulation, we agree that this is a great thing for the end users. But there is an issue what this regulation does to the commercial relationships. So the regulation basically says that operators are obliged to carry all traffic or content to end users without blocking, throttling or any discrimination which is, as we said, great for end users. But this of course, let's say puts a little bit of a bias if you look at the relationship between on one hand operators, and then on the content providers, so we have an obligation to carry all the content to the end user. So this is where we see this kind of imbalance in the Internet ecosystem or the digital ecosystem rather, starting. So one hand you have operators who invest and on the other side, then you have content providers. And here I would like to be more specific, especially the large global Internet giants that extract value out of the networks through different business models, multi sided markets, data advertising, etc. So, when we put this kind of all together, we see that then those commercial negotiations that should be taking place, the kind of IBM socket connection level that I guess is the concrete point of contact when this negotiations would be taking place. We clearly have an asymmetry. So at the moment, the results of those commercial negotiations are rather poor for the operators, and they certainly go nowhere. Near to be, let's say, fully compensated, well, fully compensating the traffic that is pushed through or is passing through the networks. And you talked a little bit about the peering. We know today that while in the past of course, there was this kind of principle of symmetric traffic and the kind of good tradition of peering based on that. Today, that's no longer the block no longer the case. So traffic is is no longer symmetric. And actually even historically, between large players paid peering has been standard already for for quite a while. So this is really the kind of the underlying reason where we see the commercial and regulatory symmetry between operators and large Internet providers. And that's why we had let's say, started the discussion about the financial sustainability of the ecosystem in the digital digital world, but also then very specifically, the relationship between operators on one hand and then this large content providers who are currently not related to to a significant extent in the European markets. So maybe I'll just appear as a k ind of initial introduction,

that was very helpful. Thank you so much, which the two gentlemen would like to reply first Rudolf, Michael.

Good. Yeah. All right. So thank you for the introduction. It's nice to see the names of a lot of familiar people, if not the faces and just just kind of in just kind of going back when I was at the FCC in the late 1990s. I wrote the paper that Bill mentioned the digital handshake, talking about why Internet interconnection hasn't needed to be regulated. I've written out quite a bit on that since then, including with Analysys Mason, two papers, one for encompass in the US kind of looking at taking a global view of this debate, the infrastructure investments of the tabs, which I'll get to in a moment, and the impact of the network usage fees and one four that was targeted more at Europe on the European cloud companies, by for the European cloud companies. About the impact it would have on them. I'll try and drop those into chat later in this discussion. So I mean, I think first of all, it's it's worth pointing out that the trend is traffic is really being generated by the customers to the broadband it's not being pushed out by the caps to congest networks. It's not like phone calls where you know, who initiated the call, and then calling party pays the bill described makes sense because you know, who initiated the day and know who initiated and they respond to the price signals of all the prices built in. In the encompass paper. We talked about traffic sensitivity and showed that, in general, the traffic network costs are not that traffic sensitive. We showed while traffic went up 160% between 2018 and 2021. The Op X and operating in the capital expenditures went up just 3% Because once the networks are configured, particularly the fiber ones, there's not that much extra cost with capacity. Obviously investments need to take place to get those networks in place. And in terms of the asymmetry of the traffic is marked said obviously there's much more traffic going down than up I mean, that was designed into ADSL that's the A and ADSL and it's clear that most people are receiving much more traffic than they're sending out. But to compensate that the Internet companies have made significant investments in infrastructure to push content closer and closer to users. building data centers around the world. transport networks delivery with the CDNs with caches to put the content closer and closer, particularly video and static content closer and closer to the end user lowering the cost for the ISPs and making the latency lower so the quality of service is better and better. In the encompass paper we showed that total expenditure on those three things hosting transport and delivery since 2011 was 883 billion. And just in Europe alone in the last few years is an average of about 24 billion on infrastructure, including hosting, which is the majority of it. But there's also significant investments in content services and research and development and all the advanced services that are coming our way and that clearly is an expenditure and that's ultimately what what brings people online to use to use the Internet. So we recognize that there is a regulatory mandate to build out investment to reach the digital decade and get gigabit everywhere in Europe. I would just argue that taking a system that's working today, that is Internet interconnection, and there's no reason to break that because of a different problem. There's no reason and we can talk about what that would do. If this starts to be regulated but there's no reason to regulate and to break one system to address another regulatory issue and challenge. So I'll pause there and

great, thank you Rudolph.

But it's funny, I've been posting some links in the chat for people to see because this is the zombie debate that comes from the grave every five years or so. There's always in the meetings from 94 to 96. Common telcos from Europe are complaining about the Americans already got a copy of Deutsche Telekom, very angry about unlimited traffic in 2001. Going about Z Americans even then 2011 We had the economic proposal as well. I mean, every time is that income instead of provide any real data, create focus reports. With back calculations. And then that petitions followed for example only investment cap no publishes a really nice report partially with my analysis Mason statistics for Europe to digital. What's cookin safe digital communications. Just the alternative telcos so not that not members, actually far ahead in FTTH investments. The reason some places in Europe such as Germany behind in FTTH investment is because the incumbent hasn't done much. Most of it came from alternative providers. There are other places. Spain now has like a percent FTTH France is almost done finishing a national project in fiber of all rural areas. And incumbents have also invested oranges a million homes behind this a better compiler but who needs to pay for them? Literally French villages see a digging through show up on Monday. On Friday. Everybody in the village has FTTH and all the Copper has been disconnected. That's the kind of stuff trance is good at and they have achieved if we then look at the traffic, every EU telco berec said that EU networks handled COVID traffic increases really well. Just heard about exponential growth in traffic. That's a mathematical trick because when something grows, you can always put an exponent to it. It can be very, very small. The actual average traffic growth, according to KPN and BT, is 21% per year. The traffic per user VPN budgets in its wholesale offer six megabits here if you are a big telco building a general network. You budget six megabits of traffic for and 21% growth. So all of the Netherlands 8 million homes fits in 48 terabytes that sounds like a lot. If you know that Nokia now builds a router, a European designs and builds router handles 230 terabit nice people in Belgium have Proximus actually built their networks around 100 terabit routers, you know, smaller countries that have like 36 terabits, a single box could handle the whole country of course, a smart person rather than the whole country through one single wrapper leads to that to multiple locations and redundancy etc. And of course, nobody should send all traffic to a single box. Of course you do local interconnection of course you do local caching. Not idiots. Keep this stuff local. You don't have to do the backhoe liner, which is why some EDA telcos such as KPN F local caches, like if it kilometers as a local cache, for Netflix and stuff. Because it's also department in the networking department money, it costs the health department money because they want to have one final nitpick everything has never been about symmetric traffic. Not anytime in history has not been it's about how much you say on printed. books because the Internet 75% networks will generally pay more for transit. They would benefit the most and it's not about what they're actually post because you pay always. I started working at an Internet exchange in 2001. We paid 110 1000 euro for two megabits in the east of the Netherlands, and we got an Internet exchange in perpetuity. Forever. So a lot of savings. Didn't matter which direction it went. So there's a lot of misinformation. There's a lot of incompetence. The reality is if you pump during traffic loads, people complain about traffic. Say it cost you too much. I haven't looked at your first investors presentations because bonafide upon waiting for it and on others have said that you haven't traffic loads really well. It's not even hasn't like thing. ethic. is growing fast. Cost of traffic falling faster. Wait a minute. So reality is Yeah, and also reality is incumbent on us. Church. But also the French regulator says that's a cost in France, around 10 to 20 cents per megabit. But orange charges pricey to connect and connections to its transit provider to several Europen megabits is known as a divination monopoly, which it then showed that during COVID It would go as far as forcing Bucha portions that German universities pay for 100 Gig link because Deutsche Telekom at 20% traffic loss in its network. Don't do it. You're pushing stats that students could tell that to hell. If they couldn't follow classes, for ships that have to pay, not even Telefonica and Vodafone that further, they said they gave interconnection direct BNI event Am I give the event or written it over a candidate

Great. Thank you very much for it all. That's very interesting, kid. I'm still kind of like a little bit puzzled. So I just want to follow up real quickly to my read maybe just helped me understand so big telco is big. If you look at the market caps, assets, and so on, it's you know, hundreds of billions of dollars. Companies are global reach some like Telefonica are all over the world. I'm a happy Deutsche Telekom customer here in New York. These companies are not poor. The ask is that the state would inter mediate in their commercial relationships? Force one set of large companies give money to another set of large companies. And I'm wondering how would that actually work operationally? Deutsche Telekom orange Telefonica. They count the bits that they can think they can attribute to Google and they send them a bill is the state involved? What happens if they just disagree with the assessment used to pay wouldn't they just pass along the cost to the customer? I just the fundamentals of it. I'm still struggling with so if you could just help me a little bit more. That'd be great.

Okay, yeah, sure. I'm happy to do that. So yes, how would we do that? So I'm looking at him and I was I was trying to explain that of course, our sector has been subjected to this kind of were very heavy regulatory burden ex ante regulation, etc, etc. So we are not here saying that yes, we are. We have been suffering from this and still are. So you know, the other guys should be so as well. But we are looking here. It's a very targeted solution, not a sending party pace model. Like you know, the MIS understanding is often been in the in the press, but a very targeted tool policy tool that would help us to have those commercial negotiations with the other party and especially with those large Internet giants. That today are not coming to the negotiation table because they do not need to have the open Internet regulation in Europe guaranteeing that whether they negotiate or not at the commercial level, operators will have to deliver the traffic to the end user. And so there would be some kind of an obligation to negotiate simply to have those commercial negotiations that in our view should be taking place under normal circumstances. We have one public court case at the moment in Europe. Notice that a calm suit meta on this issue, because my dad stopped paying. I don't know the details. I don't want to comment on it. I think there's some information if you look on the Internet, but this that bad that you know commercial negotiations are not taking place. So from our point of view, number one, we should make sure that those commercial negotiations take place and they will be some kind of a price negotiation. The price negotiation should take place on commercial terms. From our point of view, it need not be regulated, etc. So commercial terms, but of course as we know sometimes these negotiations are difficult. So you know, should that not should there not be agreement, then we should have some type of an arbitration mechanism to make sure that we actually come to an agreement, and that's where then the public body, whatever competent authority, whether that's a regulator or somebody else would step in to kind of guide the way of course, we also fully expect that no any contribution would need to go on investment, I was trying to highlight the investing investment gaps earlier on. And we fully expect also that there will be some kind of requirements but countability that there will be some kind of governance around this because otherwise, of course, we understand that the policymakers would have perhaps hard time justifying and putting forward and it kind of, is it all I would like to also mention about the IP peering in general that this is still this kind of very idealistic view about how peering and transit work how the IP interconnection works. And I would also like to say that, as on one hand, you have the kind of peering and transit but also CDNs you can see the other side of it. So today actually CDNs also a substitute in a way for peering and transit. And I think that even Analysys Mason recognizes that in one of the reports and Beric certainly does, when they look at in one of the recent reports on the Internet ecosystem. And when you look at the CDNs that come to Europe, many of them are actually proprietary, regulated, they are outside the regulation. So you have been operators who are heavily regulated, trying to compete with transit, traditional transit, on the interconnection against other parties are using a new business model, which has many, many benefits. And we're not at all it's a contesting that. But you know, other players who are not regulated so we see also a little bit of an imbalance there. And that's maybe a market definition problem from the European side, from the regulators side. So this is a little bit how we set it up today. But we also, you know, there are many details of course, and policymakers, no doubt have their own ideas and other things, but that would be our current instinct on how this could be implemented.

Okay, so the idea is that the state would effectively force parties to the table to negotiate with each other. So then the question becomes, which parties so you've, you've argued that the proposal or at no and the telcos have argued that the proposals would only apply to the largest caps, the largest contents and application providers? A lot of the opponents seem to think that the proposals but inevitably negatively impact a wider range of actors across the ecosystem. How would we ensure that the impact here would only be on these big players? You say you're talking, Rudolph had his hand up, let's let's start with him. And let's try to stick to three minutes each so we can get through a number of rounds of questions. Thank you.

There's something weird about the arguments on the one hand, we're talking about an investment gap, then you would think it would focus on countries that don't meet the EU target of one database per household. In 2030. We would talk about how do we get Germany fiber how do we get these further? When we're talking about proposal, it's about charging every other network that's not an add on member basically for track and also forcing them to negotiate this weird thing because Internet is a network of interconnected networks 75,000 and as also present in telephony, finance and politics, so you can't need to connect with everybody directly. You can also buy trends. So basically once is to end the option of buying transit and have possibly purchase from the local telco which will create a termination monopoly. Germany meta simply took up Deutsche Telekom online strep, and so Phil said we're better customer. So we stopped being a customer. We cancel a contract and we'll buy transit from somebody else. Somehow that's not allowed. So he only allowed to pay directly to Deutsche Telekom. Dutch telecom doesn't feel that it is to handle transit through another air. It's not trying to force method to stay a customer, which is weird, you know, because either you're a customer, you can leave. You're not a customer. Then somebody is exploiting it termination or not. And this makes it really hard which is on him to tell to say this is necessary for investment. Why would we pay for folic acid then when they're done with FTTH investment? We all pay the Greeks to actually get fiber everywhere. We hear this because there's so much traffic. Then we also hear that a broadband warranty Oh, Nokia makes these nice routers, we can handle all our traffic in so there's a lot of this information here. What is really going on? It's almost like it's jealousy. But it's an old version tactic for some of the other policies that have been imposed at the same time, for example, deregulating unbundling rates, Europe, which are currently regulated and as we heard, the TelePacific that they are really heavily taxed by the minute that are profitable, but it's really weird. Okay,

so how do we keep it focused on just the biggest players that only they are being asked to negotiate? Because lots of people are using Amazon cloud service? I mean, there's a lot of other players that could be I read people from the public broadcasting world saying this is going to impact us in Europe. So how do you keep it tightly focused? Michael, can they do you have thoughts on how could that work?.

Yeah, no. I mean, I have some other thoughts on the negotiations, but I'll answer your question. I mean, I think it's difficult. I think that we still haven't gotten to the bottom of the question of what happens if the negotiations fail and regulation is imposed or traffic is not accepted. That would seem to be a violation of net neutrality. But I think also as you as you alluded with Amazon cloud the some of the biggest companies have CDNs proprietary or not, some of them have our cloud companies. And we're all customers at the end of the day of cloud companies, broadcasters use them to deliver traffic. Governments use them gaming companies, small content providers, to the extent that the network usage fees are higher than would be negotiated. There may be less investment in CDN or infrastructure, there may be less investment in content or prices may go up and that will impact ultimately could impact everyone using cloud services. So I think that's, that's the answer. If it really focuses on the largest and then includes cloud content and cloud traffic, then then it will impact anyone using the cloud at the end of the day.

So how do you avoid that?

Just to just to maybe say on the on the net neutrality. So of course in this negotiation scenario, if negotiations fall through, we are still subject to the net neutrality regulation, so traffic keeps on going. This is a parallel scheme that we are seeing and the European Commission on many occasions have publicly actually confirmed this that net neutrality and this very country usual fair and proportionate contribution, which is now enshrined in EU policy, are in fact parallel initiatives. But on the on the right goals.

Just how does that work? Maybe I don't understand network neutrality anymore. Or maybe I just don't understand it. The EU context you're saying some originators of content shall be treated differently from an economic and a technological standpoint, that's consistent with network neutrality.

The EU regulation says as I said earlier, that all traffic should be delivered to the end user. That would not change without discrimination. So all traffic would be going to the end user. But the net neutrality regulation of course doesn't the commercial negotiations are not really in the in the scope of it as such. So so then you can talk about the principles of net neutrality of course beyond your regulation, but that's where we've been, at least in the public discourse also heard the European Commission drawing the line, but on the on the scope, so we do see that data traffic volumes is a key determinant. So clearly, those companies who are actually well, generating if you like, most data traffic, or originators of most data traffic, that's that's one criteria. But we do think also that there should be maybe some other criteria and use some of you may be aware of the recent EU regulations on the digital markets like digital single Services Act, and therefore example There are criteria that looking at the footprint in Europe, so companies that are present in three or more European countries. I think there's some economic indicators, so turnover Etcetera. Etcetera. So I think that it's absolutely nobody's interest to have spillovers to companies that are not the source of the problem. And I'm also wanting to touch on the assymetry. For example, at national level we of course, have important players content players like broadcasters, and what have you national public broadcasters, but they're typically relationship the commercial relationship is more symmetrical. So there are probably very tough commercial negotiations taking place. But there is a result there are negotiations taking place. So our members are not seeing a problem at that level. It's really at the level where we see this market as symmetry. And just maybe just one more comment on on the points that is only at non members benefiting from it. That's not at all true. So we have been very clear that we would like the whole ecosystem to benefit from this small and large operators. And you will have seen certainly public statements from very different types of operators, network operators in Europe in support of the initiative. So we do believe that there's a way to make sure that the whole ecosystem benefits

there have also been statements from smaller ISPs. And so I'm saying they don't need this. So that's, excuse me, but okay, I take your point. Michael, were you trying to get in on this or Rudolph? No,

I just wanted. I just wanted to point out very briefly that I mean, there is a peering that comes out of negotiations. And I think our Sep track of peering arrangements, they have a annual or biannual report, and they I think the last one said that something like 42% of traffic goes under paid peering, but clearly not enough to pay for gigabit networks to every rural area of France. But that's not typically a part of the negotiations. And again, I think that's something between the operators and the EU that are that's the ones ultimately asking for those networks and asking for them to be built. And putting it into interconnection is a roundabout way of an that will impact a system that's been working very, very well for the past 30 years at what it's meant to do and it's meant to deliver traffic not not pay for for new infrastructure investment. Thanks,

Rudolph.

That's one of the things man just did was misrepresented with the EU actually agreed. The EU agreed that all markets actors benefiting from digital transformation was schoon their social responsibilities and make a fair and proportionate contributions to the costs of public goods, services and infrastructure for the benefit of all people. Living in the EU. So it's public goods, services and infrastructures to have a fan contribution. It's not just infrastructure, who needs to get some money as a result, till debate gets distorted into just being about infrastructure, but people do pay CDNs etc. Do pay they saved help us a lot of money. CDNs IX were actually invented to replace caches in the 2000s. The telcos invested into PayPal traffic close CDNs changed the business model of sending or generating the traffic in their website. She paid somebody to distribute it around the world and save the telcos money and also made it easier for telcos. They didn't have to maintain a big box. It was always behind the times and it was always costing more money. So the market has come up with an absolute brilliant way. Of running traffic around the world of 75,000. And anybody can do what they want in France. 60% of traffic is paid to telco in the UK it's almost nothing. It's not too much, and it doesn't affect investment. Reality is telecoms of all stripes, a very profitable, local loop, but the alternative is to hire the wires from the EU telcos price that has a good margin on it. But it generally also is includes traffic they already paying in the Netherlands, it's one euro 39 For six megabits. Where does the extra money need to come from? And the statement that is they don't want to negotiate? Yes, they do. But if Deutsche Telekom or France Telecom charges, five euro per megabit or do Europe or Mechanix that also just go to another network by just by transit. Should I just paint with a little one, this will be call of termination rate. Elimination mode obsolete. Hey, we know that from mobile, orange in the Netherlands increased dissemination rate from mobile to 25 cents a minute because it had a budget shortage. It hasn't what? Oh,

okay. All right. Thanks for merit. I mean, I think there's obviously a lot of interesting ideas on the table here and people are very curious in your views here. So it's been very helpful. And one thing I their tickets I just wanted to follow up real quick. When one was on the investment itself. We do know that the caps the big content providers are investing massive amounts of money billions of dollars in building infrastructure in EU but somehow the discourse that I'm getting from the telco side is like they're not doing that and so we have to care though cost. I'm not understanding why their investments are not being counted as relevant here. The other part that I really not understanding is your you insist that this is not centered party pays. But that's precisely what no proposed the wicked negotiations for verbatim. How's this different from that? If it's not the center network party that would be paying? Who is it that would be paying I don't I'm not understanding that.

So your first question, sorry, I lost that.

That the caps are investing billions. Yes. Right. So the argument that I have to carry all the burden seems to me No no.

So indeed, I mean, we of course recognize I mean, caps are investing a lot of money on submarine cables, CDN, cloud, etc. As I was saying earlier, many of these infrastructures are proprietary. We also know that now with the development of edge cloud in Europe we are seeing that also caps are starting to invest in last mile connectivity based on edge cloud, through different types of Lan Lan wireless solutions, etc. So effectively, caps are of course investing in the connectivity market. I mean, I'm making here a differentiation between network investment and cloud investment, which of course, supports connectivity, but we in Europe, at least don't count it as as networks. But the big problem here is that because of the infrastructure, so our proprietary apps are not currently regulated at all in Europe. So we have price regulation on the traditional vertically integrated telco in Europe. We have different types of regulation. I was I was I don't want to repeat it. And at the moment, these newcomers, if you like, are not subject to the same regulation. And you may say what you want but of course regulation, it is a cost does, you know limit your availability to come in to invest but also to innovate? And that just the bottom of it, and this comes in different shapes and form forms in Europe but but that's really where we see the symmetry.

And how's it not sender party pays?

Yeah, so we Okay, so there was a discussion in 2012. I wasn't unfortunately unfortunately. Part of the discussion back then. But we are not here. Looking at the blatant kind of blanket sending party pace thing as I was trying to explain. This is a very targeted approach, trying to address those pain points that we have in the commercial negotiations. We are not seeking for contribution from all content providers across the board. That's not the kind of policy that we are trying to, you know, promote here. So so that's really it's much more targeted from our point of view. That's that's the that's the main difference. So this is from our point of view, it is it is simply much more based on the current market. Conditions and their symmetries, both in regulation but also in the market. So terms that we see

customer or sender party, no, I don't. Okay.

And also going back to Michael's comments, if I can also try going back to Michael's comment. So this is a fair and proportionate contribution that we are talking about in Europe. Network Operators want to remain the private primary investor of course in networks I mean, it is not that way. There's some kind of a lookout for massive massive, you know, majority investment in networks. No, it is recognizing that these guys in the European context should play a role and contribute because of the circumstances and the regulatory frame.

Okay, so I want to move towards the open discussion part pretty soon because we have a lot of people chatting in the chat, which shows a lot of interest on the part of the broader participant pool here. I just want to ask one last question. Kind of synthesizing some of the points we asked. What do we expect that what are the prospects now for what's going on with the European Commission? I mean, we again, I remain puzzled that, you know, the former CEO of orange is in a position to make a decision about what happens with orange, but more generally I'm not understanding how do we see what's going to happen in the EU? How do we the prediction of what's going to happen in the EU and how that might? How might that impact the broader global Internet how why should the world care happens within the EU? Could people maybe come to that? Let's go start with Rudolph. And we'll go to open discussion.

You already see that what is happening in Europe has inspired India was the same questions. Of course many African robots always looking for this. Us the debates. Europe is now used as for the debate about the Universal Service Fund, which is historically mismanaged by being paid by telephone rates for long distance telephony. And there's proposals that this then needs to be paid by the continent also argued that Europe is debating this as well as what we're debating. So what effectiveness will be will not be that big tech will be charged everybody will see this. Even telcos will not take their code. For example, Telefonica house, corporate investor site, WordPress. WordPress runs again on somebody else's interests and before you know, you're paying everybody start paying each other because it's a termination right? It also does it will kill Internet exchange points. Internet exchange points, developed the strengths of post when they're high. Make it useful to find an alternative route to a whole bunch of other metrics. Most of the traffic is through private peering, or public peering gives you 80% of the other networks. When there's a termination rate you need to pay as we saw in telephony, there is no reason here because determination network determines the incoming routes. There is fully originating network, no way to save money. And as a result, this thing in telephony, we see very little hearing very little way of Internet exchange points but also very little competition.

But So, Michael, what's your what's your sense? Of how this how this my play in the EU and put it means to the global Internet?

I mean, I think I hope that what Beric said about it, which they've consistently said since 2012, by some some weight I think they came out quite strongly. I mean, in a preliminary assessment on the impact and need for this, it's not very different from what I would have written if they asked me to. And so and then I agree with Rudolph that it is being looked at in other countries. I would just urge countries to look at the experience of South Korea and as you mentioned, Mike Nelson can can speak to that example as well but they've started six years ago. You know, as the first country really to do this first between ISPs and then they've had to keep adjusting and adjusting. And it looks like more and more content is not being cached in country, requiring particularly smaller ISPs to spend money to go get it slowing down speeds, Twitch and other companies are not streaming or not streaming as high resolution to not have to pay the fees. There's high transit costs. So you know, I would encourage that that's an example too, and I hope that they're looking at that one in Europe to if it takes six years in Europe to do what they're trying to do in Korea. Then the digital decade is over by then. And hopefully, the investments will have been made because nobody disputes that those investments will will be useful for all of us. For everyone in Europe.

If this model were replicated Michael by say, developing countries, if they looked at the Europeans and said how they did it, we'll do it too. Might that impacts service in the developing world for example?

I think that would be dangerous. I mean, no, no company can can avoid investing in Europe. Right? I mean, that's you know, 500 million or whatever, people, you know, a significant market or for all of the particularly the big caps that that are the focus of this, but they don't necessarily have to invest, certainly with caches. With infrastructure with submarine cables to developing countries, and this came up already in the wicket 12 years ago, Which, admittedly that no proposal was much different back then. But that I think, would be a significant mistake, because it's easier to not invest in a country where you're not doing much business anyway. And, you know, certainly these cloud companies and others provide really valuable services content input in those countries. So I think that would be a much different impact.

I'd like to open it up because I think we're total five this is what I normally do. And then we've got a lot of people chatting in the chat. So hopefully, some folks will feel compelled to raise questions with us, if any of the panelists have points that they didn't get to make because I tried to move it along, and always bring them back up in the context of responding to questions from the audience from the broader participant pool. So let's open it up to the floor and see if any of the folks who are heading over here I see many familiar names, including some who have asked questions already, would like to raise their hand just use the little raise your hand thing and then we will take you and get going. Anyone would like to start?

otherwise, I have to search through the Alright, here we go. Hendrik Rood says question the merit. As a user of KPN I can receive Netflix if I switch to T Mobile. Vodafone Seago. I can receive Netflix my monthly subscription fee to Netflix doesn't change on Netflix, who I am paying a monthly subscription fee to can choose between KPN Vodafone or T Mobile to reach me. So when Vodafone would double their fair share, gigabyte per month, finalization that flicks then charge me a higher monthly subscription fee signal to me which of the access networks is the more volume fee expensive one? Do you understand the question?

To be honest, I'm not sure I do. But I do understand it's a question about about prices, I guess. Listen, I mean, everybody's facing upwards. Kind of going pricing presses. I mean, our sector is facing it. I believe the content providers are facing it. I think Netflix already in the last six months raise their prices quite a lot. telco prices also going up in places. It's it's an ecosystem. And I think that there are costs and somebody has to cover the costs. And it is again for policymakers to decide effectively what is more important, universal connectivity or content, entertainment content. That is very cool. Very nice. We all love it. But but that just did, and I don't think that this is the decision that necessarily we will take but but certainly certainly this is a question of course.

No, that's not the question. The question was, if, if I wish I as a consumer can choose between a number of access networks and content from my Netflix subscriber count choose because if I move to another provider, they have to send traffic to that provider. Now if one of the providers because I assume there is not a joint negotiation with the content industry, so if Vodafone Zico raises their fair share fee to a content or access provider, which then my subscription per month, which is now eight euros, Netflix go to 10 and so I can see as a consumer that I could better stick with KPN NGOs. They don't charge at high fee.

Okay. Listen, I don't I don't think that we've discussed this in such detail, but I don't see this playing out like that. If there should be something I see this as an EU level policy whereby somewhere along with the lines, the traffic volumes and the different determinants and and what have you would be averaged out at at an EU level and I can't talk on behalf of Netflix but would be very strange if they would be you know, charging different prices but different operates. I don't see that that would be the way to go and maybe I didn't understand your question correctly. But

this is already a very helpful because you effectively are planning for a more or less uniform shirts of fish. So, it will not be 111 x axis network negotiating with content.

They will be it will be? Well, we don't know. I mean, we know nothing. At this stage. We don't have a policy initiative. We have nothing but in our conceptualization we are seeing that the most lightest way to do this would be based on existing commercial negotiation. So yes, you have a point it would be company facing company negotiation, but then how the costs because this would be the assumably happening with with many companies. So how companies then will average out the costs on the side of content providers or investment on the side of telcos. I mean, that is you know, this is not something that we have assessed at all.

So then the question will comes completely different in the Netherlands. Regulation has been dismissed. 20 regulator completely. The courts have skipped over regulation. On fixed networks because there was enough competition. In the Netherlands we see the most expensive, most expensive areas. The rural ones are effectively constructed now with FTTH by new entrants. Some of the large incumbents invest there.

Okay, this has been very helpful back and forth. I'd like to get some other questions and thank you very much Hendrik, George Sadowski asked this question in the chat. If European users want the content, shouldn't they be willing to pay for the infrastructure to deliver it? If EU telecom price regulations with the price rise to that level? And aren't those policies the root of the problem? Rudolph?

first of all, you price regulations are only there for dominant networks. So the Netherlands doesn't have price regulations. Build a network here. If competitors networks VPN isn't regulated, places where networks are regulated, but that's because the operator has dominance. Where the regulation works is that you're allowed to make a fairly fairly to look at each EU telco, they are very profitable. And there's competition. They don't have to have Ancilla. So telcos are going fine, some of them are even saying that they want to do wholesale because having more customers on a new builds FTTH network, actually Mexico profitable. So there's absolutely no reason to assume that the net return being paid for and there's also no reason to assume traffic's of how influences costs. Talk about six megabits at most per customer. If you can't handle that, there's no telco in you. That is invested presentation says, ooh, trafficker growth, got a decent amount of energy. It all meant much energy costs, and how much replaced cost is no nowhere. So this is really weird to say that traffic and costs are related.

But if I may just add very quickly, I mean, we are not looking at this as the situation today. This has been the situation for some time. We are really projecting to the future, but very happy the commission has launched the consultation that looks at the future of the telecom sector abroad basis. We are not fully happy with the EU regulation as it is today. But we do see that this pillar of fair contribution is a worthy discussion to have as we are now reassessing the future of the telecommunication sector

provide any data on how much extra investment is needed? Because most countries will be ready by 2030 45 million ECMO is mentioned in a few specific countries, countries that are done in 2013. Most of us the most former Eastern European countries carrying peace, Germany, Belgium behind so why are we changing gear type situation? Or basically, Italy, it was to be mentioned as well. Are we having this entire traffic? The problem is a lack of investment. Some countries don't we did it. Well, you bet how to get fiber from developing nations.

I think I said Rudolph in the beginning it's about coverage and cable capacity. But I don't want to go to border international crowd with the European specific spy country.

Right. Speaking of developing countries I requested here in the chat seems like people want to ask questions in the chat rather than raise their hand. So a question from Anriette Esterhuysen in South Africa. She asks if as some of the panelists are saying, there is enough investment already from the platforms in infrastructure peering and the telcos have enough money to do as well with costs coming down. From Why are so many parts of the world still without sufficient infrastructure from my end of the planet. This is a clear market failure. There is public sector failure. We're not asking that ETNO's proposals are necessarily the answer, but there's a problem. How does this debate translate to other parts of the world? So, Michael,

it's an excellent question. I'm not sure it's a market failure per se. Although I can see why it feels like one. I mean, it's a it's a question of costs and affordability and getting the financing to reach the areas that that are expensive to reach or that are sparsely populated. And you know, I'm not going to defend necessarily the the caps but they are spending a fair amount of money on on the ISPs into most countries to lower the cost of traffic exchange, helping some in Uganda they're helping develop you know, build some fiber to help with connections for the mobile operators. But I think it's a broader problem than that. And the ITU Now certainly under Dorene, is has the partner to connect that's that's getting significant pledges. You mentioned the public sector. issues. Some countries are sitting on all of their Universal Service Fund money. So it's clearly a problem. It's clearly needing all of those things and some of it is regulation. Licensing. More operators will help making it easier to land capacity and build it into the country. So there's a lot of issues. I'm not sure it's a market failure, but it's clearly needs to be addressed and it clearly shouldn't be minimized. And I see that you do say that that shouldn't be part of it. That was in 2012 And I think that was pretty roundly rejected that the any proposal on sending party pays part of it, but clearly it's a significant issue.

Right? Okay. I see actually Desiree Milosevic has her hand up, but we're off just quickly two fingers on this one. And let me go bring an audience member.

We can also look at how this played out for telephony bill. Now the debates about Internet traffic for the OECD are did a study on interconnection rates. What we saw an excellent example India dropped its rates for mobile and fixed telephony. Some of the lowest rates in the world as a result built out of networks, both nationally and to the rest of the world was actually stimulated, gave India its call center industry. All kinds of other things happening in Pakistan did the exact opposite and raise the rates and actually saw less investment less steel that interconnection rates have never been related. Rollout they've had the exact opposite, every time and again and when you have investment problems, often national situations Yes, sometimes need from Western countries to be an option. We need to help Africa let's put a fun together. But what we saw in recent years is actually it gave us I think built to various parts of Africa that there's so much capacity to Africa. The big question is, do we build it in the countries? How do we get it out how we get it distributed? That's less to do with the rest of the world in order to build the situation.

Okay, great. Desiree Milosevic. Nice to see you know, if you're in the UK, Serbia somewhere else, but anyway, please, question.

Thank you. Bill just landed. Hello from Berlin. was in New York last night but anyhow, just to ask further the question. What are we talking about here is some unclosed amount that needs to be negotiated. I just like to say that the cooperation working group at Rype also is looking at this problem. So we're having parallel discussions that I'm enjoying this panel. My question is really, to add no words. Do they then see that there will be some kind of Universal Service Obligation on telcos to provide gigabit broadband to all rural places in Europe or how do you see this money being spent that is potentially negotiated?

Can I just take it, Bill? Thank you Desiree, nice to hear from you? Listen, I mean, we we in some countries in Europe, there is already Universal Service Obligation. Sometimes this is imposed by a spectrum auction. So in many countries like, I don't know Germany, France, when you get a license, spectrum, license, you have an obligation, Universal Service Obligation to use that license to then deploy in a certain amount of percentage of the country depends a little bit on the country, how much that is. Other countries have even I believe universal service funds and I've heard that for example, in Bulgaria, they would be such a fun but from our experience, and we've done a little bit of looking into it haven't typically worked very well. And from from where we are sitting actually, this new digital decade targets the European Union kind of political goal if you like so 5G and FTTH to everybody, well, not FTTH, very high capacity networks, which could be other technologies to by 2030. That is, no it's not universal service obligation, but in a way it is the political pledge that that's where we are going and we certainly as operators I mean, our members have been fully endorsing this approach. So I don't see that at the moment. We have really, yeah, we don't have an EU wide approach. But in some countries, certainly you have this in place using different means.

Okay, I see that unless people need to jump on that one. I have another question. From Yes. Okay. From Phillipa Biggs at the International Telecommunication Union in Switzerland. Hi, Philippa. Please, ask your question.

Hi. Hello, everybody. Thank you for a very interesting discussion. which covered a lot of ground obviously, is a specific European angle. I am asking this in a personal capacity. Where on earth is the discussion of climate change? Because having spent three months last summer at 42 degrees or 38, maybe depending on where you are? Not you know, this is really an issue and I would have more confidence in the accuracy discussions. Honestly, we need to be pricing in here. The public you're talking about public good. Well, let's talk about public damage. There is significant carbon emissions is way more than I think are known or understood, plus the heat pollution from servers and data centers, companies, private companies like Facebook, Google, Amazon, they're all putting their data centers in the north, the Scandinavia and Arctic Circle not surprised the ice melt is going faster than ever. I don't believe the climatologists have factored that into their models. So whilst we're talking about interconnection and charging, then it would be very important to get the climate angle in there and how we can possibly compensate for the cut some form of carbon offset in a sensible way. So thanks.

Thanks for the interesting spin on it. Rudolph you have a you have a thought on that.

Yes, I've actually done quite a bit of study also for the Dutch governments around Amsterdam with regards to data centers but also wider. It's a widespread misconception that traffic and energy use are correlated. There's a lot of academic research that cites kilowatt hour per gigabyte message, which are completely wrong. Gigawatt, per kilowatt hour per gigabyte is like measuring the energy use of lampposts by the number of cars to try following up is irrelevant. The reality is that according to research by Ericsson but also data from ethno data from almost every incumbent telco, your traffic has gone up massively, and energy use has either stayed stable or decreased data KPN in the Netherlands, for example. 34 times increase in traffic, they still use and they now use only 60% of what they use before particularly when we move to Piper and 5G we will save even more energy costs. If we build more 5G sites in countries that haven't had connectivity yet. We will see some more use a recent study by asset in an Adela in France, showed that they expect until 2050 stable energy use networks. The best parts about the other stuff going around data centers is that modern data centers to replace inefficient older computer center from etc. server room. That's where the debate now is like how will that develop? The French government last month said well we don't expect it till 2050 efforts to basically teach their US intelligence.

Thanks. We have time for one more question then we're going to wrap up. We haven't heard from an American yet. But we have a question from Jonathan McHale, who's longtime person at the lead person on telecom at the office of the US trade representative who's now with CCIA the association. Jonathan, you want to go ahead?

Yeah, yeah, question for ETNO. If you are proposing to institute a arbitration model, what would be the basis on which you would assign costs? Are you proposing to put in a cost model which of course we spent many years, not just successfully doing it in telephony. And the second question is, if you figure out a way to assign costs to one set of market participants, aren't you essentially subsidizing the smaller content suppliers through payments that the larger would make and how is that consistent with you know traditional concepts of non discrimination and possibly net neutrality? Thank you.

Question. Maarit, you want to take it.

Yeah, I can I can try to be quite honest. I mean, the costings, I mean, you know, we in Europe just to make it clear, we are still debating also the problem statement we're trying to frame the the issue from outside as well. So to start discussing, you know, regulatory or policy specifics, including some kind of pricing mechanisms is way out there for us at the moment. So this is something that policymakers obviously would have to look at and make sure that then as you say, that it will be there will be no major distortions to the markets. We do of course, have to always say that as we already discussed the about the open Internet regulation, for example, that any policy or regulation typically plus have some economic consequences. On one or the other side, somebody benefits somebody loses. So those are those key policy decisions, I think that our policymakers in Europe will have to make.

Thank you, Jonathan. Thank you, Margaret. For that response. It's getting to be 12:27. So I think we need to wrap this up. This has been, I think, a very interesting and productive discussion. I've participated in a number of other calls on these where the discussion tended to be slanted direction or the other pretty strongly. This one I think, was relatively balanced. So hopefully we heard a good exchange of views from very diverse viewpoints. Obviously, as I say, the European Commission is running its consultation now. Anybody who has open consultation, anybody who has views that they want to share, you really should participate in that need to hear from a more diverse set. of peers. So all right, I'm gonna wrap up and say thank you, and again, remind you that the next webinar will be on Tuesday 18th In April, and now let me turn back for closing thought to Eli Noam. Eli, go ahead.

Thank you. Thank you. Bill. This was a really interesting discussion and having participated in discussions and having written books on the subject, telecom in Europe many decades ago, television in Europe decades ago. Books on interconnection. Networks, etc. In there were lots of themes here that were recurrent. So looking at, in some ways at the Broad history here at the trend. There was a time infant sees this as a discussion between over economic rights basically, between large users and infrastructure providers. There was a time the PTT model where the infrastructure providers were riding high in the saddle that were dominant, and users were not. That changed somewhere in the mid 80s. To end of the century, perhaps, where large users were able to persuade the public to open up the system. And so therefore, the large users actually had kind of increasingly a better deal than they had before. Now the question is, is the pendulum swinging back? The difference in each of these stages has been in my mind is where did government end up being whose Li was it? In the PTT period, it clearly was on the side of the infrastructure providers of a variety of reasons. Then came the change in the 80s and 90s. To liberalization and opening and privatization and the large users had persuaded the governments about innovation and competitive competitiveness and efficiency etc. So the question now is more persuasive to bring the government on their side? To my mind, in listening to this discussion here, and looking at the dynamics, it seems pretty clear that the European governments and therefore the European Union are sooner or later going to go the direction of the infrastructure providers, particular once you identify the large users as American or Chinese large, and somehow kind of insulate European large users or medium sized users from that Levy. And so that's I think, what's going to happen and so the question now is moving forward is what are some of the issues to think about for policy analysts? One of them is how do we deal with the inevitable incentives to vertical integration that the system will provide another one is how do we deal with uniformity within Europe versus diversity within Europe and these roles? The third, third reason and that's probably a political one, we deal with the erosion of the reduction consumer surplus. This new system will inevitably incur, meaning consumers will have to pay more. And lastly, the question is that the kind of was just addressed at the very end by Jonathan, which is, what is the pricing model exactly, that would underlie governmental interventions, arbitration, whatever it is, we cannot just wave our hands and say well, we'll work something out. Is it average pricing is marginal pricing is efficient component pricing isn't Ramsey pricing is other some added levies we talked at the end of one of the comments was about the environmental impacts. So would there be some kind of extra charge for kind of environmental defense and protection fund or something along these lines? What exactly is this system going to look like? I think there's some very fruitful role for economists to play to try to figure out exactly what kind of pricing there will be. Because it seems to me based on the discussion here and on the dynamics of European and EU that some charges will be levied, so no later and I'm not saying this as an endorsement, just as purely as an observation. And so I'd like to thank everybody, in particular bill who's moderated and organized this session, and I'm very pertinent and good questions and to you, the panelists. See you hopefully, back a month from now. Thank you.

Thanks, everybody. Particularly the panelists. Thank you very much for being here.

Interesting session, as always, great.

Thanks. Judith.