The EU’s “Fair Share” Proposal Is a Threat to Net Neutrality Everywhere

The European Commission has recently launched a public consultation on the future of broadband access, including whether large online platforms should pay broadband providers to upgrade their network capacity.

The European Commission has recently launched a public consultation on the future of broadband access, including whether large online platforms should pay broadband providers to upgrade their network capacity. This initiative, also known as the “fair share” or “senders-pay” proposal, is backed by telecommunications companies who claim that they need more revenue to invest in network infrastructure, with platforms like Google and Netflix driving a surge in traffic demand without paying their so-called “fair share.”

If you think you’ve heard these arguments before, you have: Broadband providers are making the same arguments against net neutrality they’ve always made, in the U.S. (and around the world). Not much has changed in their outlook since 2005, when Southwestern Bell Corporation’s CEO Ed Whitacre, who was about to become AT&T’s CEO, said that he wasn’t going to “let” his users use search engines like Google, or voice services like Vonage, without demanding those companies pay up. (He did not frame this as a restriction on user choice, but it’s the same thing.) As this is a famous exchange, I’ll excerpt it here in full. Asked by Businessweek interviewer Roger O. Crockett whether he was concerned about internet upstarts like Google, MSN, Vonage, and others, he responded:

“How do you think they’re going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain’t going to let them do that because we have spent this capital and we have to have a return on it. So there’s going to have to be some mechanism for these people who use these pipes to pay for the portion they’re using. Why should they be allowed to use my pipes? The internet can’t be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts!”

Many tech companies make a lot of money on the internet, and this has been a “long-standing grievance” of telecommunications companies. They tend to think it is somehow unfair that they sell a product (broadband access) with a guaranteed market, often facing no local competition, that is universally demanded and increasingly used for all forms of commerce, communication, education, and entertainment. We should all have such burdens to bear.

Whether they are worried about “upstarts” in 2005 or dominant tech giants in 2023, the refrain from internet service providers is the same: “Customers should pay us to access the internet — and internet companies should pay us to reach our customers.” This might be framed as a Whitacre-style cash grab, or it might involve a lot of fretting about necessary “investments.” It might be about paying for a “fast lane” (which is the same thing as paying to avoid being throttled) or making companies like Netflix defray their normal operating costs. But, again: It’s the same thing.

We’ve already seen a bill introduced in the U.S. called the “FAIR Contributions Act” that directs the FCC to look for ways to force other companies to pay for an ISP’s network upgrades. Net neutrality opponent and FCC Commissioner Brandan Carr, echoing the views of ISPs, supports the bill, saying that “Big Tech has been enjoying a free ride on our Internet infrastructure.” That’s a clue that this isn’t about incremental reforms to programs like the Connect America Fund, but a wholesale repudiation of net neutrality.

It’s been a minute, so policymakers might need a net neutrality refresher. Net neutrality is the principle that internet service providers should treat all online content equally and not block, slow, or charge extra fees for certain websites or services. This has nothing to do with “content moderation”: ISPs, unlike social media platforms, should be treated as common carriers, due to their unique place in the network and the unilateral power they have to control what their users can access.

Net neutrality remains important whether it’s 2005, 2023, or 2053. Net neutrality preserves free speech by prohibiting ISPs from preventing users from accessing the websites and services of their choice. Even with the rise of platform giants, ISPs are still gatekeepers to the entire internet. Without net neutrality, broadband providers could favor websites that they own or have partnerships with, and suppress those that challenge their opinions or compete with their businesses. Imagine if Comcast or Verizon was run the way Elon Musk runs Twitter.

Net neutrality protects consumers by preventing ISPs from speeding, slowing, or charging higher fees (or fees at all) to certain edge providers. Without net neutrality, ISPs could create fast lanes and slow lanes for different websites or services, charge edge providers to reach users (who would ultimately pay higher prices), or directly charge consumers more money to access certain content. Violating open internet principles in this way would harm internet users who may not be able to afford to access the content they want or need. 

Net neutrality promotes competition by creating a level playing field for new and small companies that offer online content and services. Without net neutrality, ISPs could favor established, dominant, and wealthier players in the market and limit the entry or growth of new or innovative ones. It would also create an unfair advantage for wealthy or powerful companies that can pay for faster delivery of their content. This would stifle innovation and diversity on the internet, while limiting consumer choice and quality.

Broadband providers like to make arguments about “fairness” that collapse under the lightest scrutiny. Residential broadband is primarily an “eyeball network” — with video and audio streaming, much more data traffic goes into those networks than flows back out. (Though upstream connectivity is very important: Just think of the video calls and meetings that have become common since COVID-19.) This traffic is demanded by the ISP’s customers, and ISPs are in the business of providing internet access to those customers, which means delivering the traffic they request. Why is this complicated? My ISP is Comcast, and a lot more traffic comes into my home than flows back out. Yet, somehow I pay Comcast, instead of Comcast paying me, to defray the cost of my Wi-Fi router, computer, and TV streaming box. 

This has not stopped ISPs over the years from arguing that it’s actually unfair that they have to do the job their customers pay them for. (For the nerdy, arguments about “peering” and traffic balance are not applicable to last-mile access networks.) In advocating for “fair share,” European telecommunications CEOs recently wrote that, “As things stand, network operators are in no position to negotiate fair terms with these giant platforms due to their strong market positions, asymmetric bargaining power and the lack of a level regulatory playing field[.]” But there should be little to negotiate to begin with (apart from relatively small issues such as which party pays costs at the interconnection site). Most of the things that ISPs want from content companies should be prohibited by law.

Neither is it true that internet content companies are somehow “free-riding” on the internet. Internet companies invest billions in content delivery networks, global transit networks, data centers, and more. They do all this to deliver content to last-mile ISPs: That’s their job. It’s then the ISPs’ job to get that traffic to users. It is true that internet content companies do not typically pay to hook up new homes or deal with the local permitting issues and expenses involved with operating a residential broadband network. Neither do they pay for snacks in the ISPs’ break rooms. It takes a very expansive view of “free-riding” to encompass others not paying for your expenses. I wish Trader Joe’s would stop free-riding and refusing to pay for my groceries. After all, I’m the one who has to go through all the trouble of getting them home, putting them away, cooking meals, and eating. Unfair!

The network upgrades that ISPs make do not just benefit Big Tech companies, either. Almost every internet service and most users would benefit from a faster, more reliable network with more capacity. Singling out a handful of large, American tech giants, some of which are under rightful antitrust scrutiny, might make political sense, but it’s an odd way to handle network management and upgrade issues.

“Fair share” is not about fairness or connecting the unconnected. It’s about lining the well-lined pockets of broadband providers and their investors. It’s a more limited proposal than one that would allow ISPs to arbitrarily block or throttle any content they wish, but it’s likely only the beginning. Policymakers in the United States should be aware that when incumbent telecommunications operators start complaining about “fairness,” the public stands to lose out.