Irish-based Tech Giants Could Face EU Telco Tax Over Surging Internet Traffic

Brussels may be about to levy an EU tax on internet traffic, meaning tech giants such as Google, Netflix and Apple, who account for 56% of all data traffic worldwide, could be charged by telecoms providers Eir and Vodafone.

European Commission internal market chief, Thierry Breton, plans to launch a public consultation on network costs, a new battlefront in the “net neutrality” war.

Net neutrality is enshrined in EU open internet law, but the telecoms industry argues that it has footed the €500bn bill for faster broadband and mobile networks, while others reap the benefits. This extra traffic costs EU telecoms companies up to €40bn per year.

However, digital rights campaigners have warned that this law could be at risk if the EU allows Eir or Vodafone to impose charges for tech giants like Google or Netflix, likening it to past fees imposed by phone companies for long-distance calls.

The cost of developing and maintaining high-speed broadband infrastructure, including 5G, according to the European Telecommunications Network Operators’ Association (ETNO), is much higher than that invested by tech companies in their undersea cables and data centres, which negatively impacts the bottom line of telecoms companies.

On the other hand, Netflix claims that its Open Connect local server network has saved internet providers around $1.25bn in fees that they would otherwise have paid to obtain content from servers overseas.

Vodafone Ireland’s Director of Strategy and External Affairs, Liam O’Brien, recently suggested that tech platforms should pay “a fair and reasonable price” for the networks they use.

The six tech firms, including Google’s parent company Alphabet, Amazon, Apple, Meta, Microsoft and Netflix, are presently holding fire to see how far the EU goes with its public consultation. Thierry Breton informed Reuters that the consultation could conclude by the end of this year.

The EU would then need to publish legislation, which could take a long time to agree, given that European Parliament elections are due in spring next year.

Both Eir and Google refused to comment on the matter, while Meta did not respond to the request.