Rapidly growing data traffic; billions of euros for new networks; sustainability and climate protection. The digital sector is indeed facing enormous challenges. With these challenges in mind, we asked the guests of our Netzgeschichten TALK to discuss the following question: what can Europe do to provide its citizens with high-quality network services, while greening the infrastructure of network – and finding a better way to balance investment costs between entities looking to upgrade and expand networks and those simply interested in leveraging network infrastructure?

Streaming continues to grow in popularity – and it continues to increase data traffic in the process. What makes this possible is a network infrastructure that continues to expand and upgrade, year after year. At the start of this episode of Netzgeschichten TALK, Angelique Niebler, Member of the European Parliament, underlined the crucial importance of digital infrastructure – an importance that has only grown during the pandemic. And, she added, everyone understands that full fiber optic coverage and 5G networks are extremely expensive. That’s why, Niebler explained, it’s all the more important to look carefully at who is doing — and who is paying for — the actual work of expanding the network. The equitable distribution of costs plays an important role in all sorts of contexts, she also noted. Airlines, for example, have to pay take-off and landing fees at airports.

A free ride in cyberspace?

Five internet giants now account for up to 80% of all online data traffic. Roslyn Layton, from Aalborg University in Copenhagen, took a historical approach and noted that the Internet was never designed for the online transmission of video and film. And yet, she continued, entertainment and video streaming are now by far the most popular ways to use online resources, and they consume the lion’s share of network capacity. Moreover, according to Layton, while large Internet companies invest in their own data centers and content delivery networks (CDNs), they contribute nothing to the expansion of the network. Layton explained that, surprisingly enough, the general public tends to see this as “normal,” although it’s anything but. Layton also recalled that Netflix, back in the days when it mailed its DVDs, paid the relevant shipping costs and never questioned its obligations to pay them to the United States Postal Service. Today, by contrast, Netflix doesn’t pay any “shipping costs,” she added – it’s happy to let telcos bear the streaming costs of its services.

Big streamers: big internet guzzlers?

The constant increase in data traffic has an environmental cost. Simon Hinterholzer, of the Borderstep Institute for Innovation and Sustainability, estimates that annual data center emissions, including associated production emissions, now amount to 200 to 250 million megatonnes of CO2 equivalent. In many areas, he explained, huge, large-scale data centers are consuming power at rates that present huge challenges for networks and utilities. Niebler noted that the European Union’s “Fit for 55” package and its emissions trading system (EU-ETS) provide a relevant framework for climate and energy policy. In light of the dynamic development of the digital sector, Brussels is likely to start monitoring the sector more closely than it has done in the past, Niebler added.

New rules for new market realities

Moderator Brent Goff then asked, rightly in light of these existing environmental imbalances, whether the market is failing within the digital ecosystem. Layton’s thesis on this issue is that a functioning market has yet to be created in this context. Telecommunications companies, Layton therefore, have never had the opportunity to sit down with content providers and negotiate appropriate rates for data transport. The reason is, Layton noted, that telecommunications companies have been subject to strict rules on net neutrality and non-discriminatory network access. These rules, he explained, are now obsolete. They date from a time when no one could have foreseen that the internet would one day be dominated by a handful of internet giants and their streaming and video content services. That is why, he added, now is the high time to modernize the rules and adapt them to the new realities of the market. He explained that, in practical terms, this would mean that the competent authorities would establish appropriate transit tariffs for the management of online traffic or, acting in an “arbiter” role, would simply ensure that operators of broadband networks and content providers enjoy a level playing field to negotiate with each other. This would ensure that large internet companies pay a fair share of network expansion and upgrade costs, he added. In its view, small content providers, with relatively low data traffic volumes, would be exempt from this cost sharing. He also explained that charging major data traffic generators appropriate transit fees would create incentives to optimize traffic – and thus reduce the associated environmental costs.

Lively discussion and lively atmosphere: Brent Goff, Angelika Niebler, Simon Hinterholzer and Roslyn Layton (clockwise from left to right)

Angelika Niebler agreed with Roslyn Layton (“Roslyn is really right”). In general, according to Niebler, market-based solutions are preferable, but when the market fails, legislators must step in. She noted that the European institutions have enacted the Digital Markets Act and the Digital Services Act, with the aim of ensuring fair competition on “gatekeeper platforms” and promoting online safety and user responsibility. Niebler underlined that the European Parliament, in the interest of European citizens, is always open to new ideas and willingly relies on outside experts to deal with complex issues. It should be mentioned at this point that the procedures of the European Parliament are absolutely transparent. Its plenary and committee sessions are broadcast to the public.
Moderator Brent Goff asked whether policy makers consider sustainability and climate protection issues within the digital sector. Simon Hinterholzer’s answer was an unequivocal “yes”. Over the past two or three years, the green THIS is increasingly prominent in the political debate, he said. As an example, he cited the efforts of the new German governing coalition to ensure that, from 2027, operations of new data centers are climate neutral.

The outlook for 2022

Panel members all agreed that the pandemic has taught us how important it is to have functional, full-coverage broadband services. This is why the issue of network expansion is more important than ever, they added. That said, Layton noted, the current situation presents an opportunity to improve fairness and balance in the distribution of costs in the digital economy, and to ensure that large internet companies pay a fair share of the costs. networks they use so extensively. Niebler also sees “trade fairness” as an important issue that needs to be emphasized more in the future.

More information: How sustainable is the unlimited growth of data on the Internet?