Rapidly growing data traffic; billions of euros for new networks; sustainability and climate protection. The digital sector is indeed facing huge challenges. With these challenges in mind, we asked the guests on our Netzgeschichten TALK to discuss the following issue: What can Europe do to offer its citizens top-quality network services, while at the same time greening the network infrastructure – and finding a better way to balance investment costs between those entities seeking to upgrade and expand networks and those simply interested in profiting from network infrastructures?
Streaming just keeps getting more popular – and it keeps increasing data traffic in the process. What makes this possible is a network infrastructure that keeps getting expanded and upgraded, year in and year out. At the beginning of this episode of Netzgeschichten TALK, Angelika Niebler, member of the European Parliament, highlighted the digital infrastructure's crucial importance – an importance that has only grown during the pandemic. And, she added, everyone understands that complete-coverage fiber-optic and 5G networks are enormously expensive. This is why, Niebler explained, it is all the more important to look carefully at who is doing – and paying for – the actual work of network expansion. Fair distribution of costs plays an important role in all kinds of contexts, she also noted. Airlines, for example, have to pay for takeoff and landing rights at airports.
A free ride in cyberspace?
Five internet giants now account for up to 80 percent of all online data traffic. Roslyn Layton, from Aalborg University Copenhagen, took a historical approach and noted that the internet was never designed for online transmission of videos and films. And yet, she continued, entertainment and video streaming are now far and away the most popular ways of using online resources, and they consume a lion's share of networks' capacities. Also, so Layton, while major internet companies invest in their own data centers and content delivery networks (CDNs), they contribute nothing to network expansion. Layton explained that, surprisingly enough, the general public tends to view this situation as "normal," although it is anything but that. Layton also recalled that Netflix, back when it sent its DVDs by mail, paid the pertinent shipping costs and never questioned its obligations to pay them to the United States Postal Service. Today, by contrast, Netflix pays no "shipping costs" whatsoever, she added – it is happy to let the telcos bear the streaming costs linked to its services.
Big streamers: the internet's gas guzzlers?
Ever-growing data traffic has an environmental cost. Simon Hinterholzer, from the Borderstep Institute for Innovation and Sustainability, estimates that annual emissions from data centers, including the associated production emissions, now amount to 200 to 250 million megatons of CO2-equivalents. In many areas, he explained, enormous hyperscale data centers are consuming power at rates that present enormous challenges for grids and utilities. Niebler noted that the European Union's "Fit for 55" package, and its Emissions Trading System (EU-ETS), provide a pertinent climate- and energy-policy framework. In light of the digital sector's dynamic development, Brussels is likely to begin scrutinizing the sector more closely than it has in the past, Niebler added.
New rules for new market realities
Moderator Brent Goff then asked, justifiably enough in light of such existing environmental imbalances, whether the market is failing within the digital ecosystem. Layton's thesis on this issue is that a functioning market still needs to be created in this context. Telecommunications companies, so Layton, have never had a chance to sit down with content providers and negotiate suitable fees for data transport. The reason for this, Layton noted, is that telecommunications companies have been subject to strict rules on network neutrality and nondiscriminatory network access. These rules, he explained, are now outdated, however. They date from a time at which 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. For this reason, he added, it is now high time to modernize the rules and bring them into line with the new market realities. He explained that, in concrete terms, this would mean that the competent authorities would establish suitable transit prices for online traffic management or, acting in a "referee" role, would simply ensure that broadband-network operators and content providers have a level playing field for negotiating with one another. This would ensure that major internet companies pay a fair share of the costs for network expansions and upgrades, he added. In his view, smaller content providers, with relatively small volumes of data traffic, would be exempted from such cost participation. He also explained that having major data-traffic generators pay suitable transit charges would create incentives for traffic optimization – and thereby reduce the associated environmental costs.
Angelika Niebler agreed with Roslyn Layton ("Roslyn really has a point"). In general, so Niebler, market-based solutions are preferable, but when the market fails, lawmakers have to intervene. She noted that European institutions have enacted the Digital Markets Act and the Digital Services Act, with the aims of ensuring fair competition on "gatekeeper platforms" and of promoting online security and user responsibility. Niebler emphasized that the European Parliament, in the interests of Europe's citizens, is always open to new ideas and readily relies on outside experts in dealing with complex issues. It is worth mentioning, at this juncture, that the European Parliament's procedures are absolutely transparent. Its plenary and committee sessions are broadcast to the public.
Moderator Brent Goff asked whether policymakers give any consideration to sustainability and climate-protection issues in connection with the digital sector. Simon Hinterholzer's answer was an unequivocal "yes." Over the past two or three years, green IT has been figuring more and more prominently in the political debate, he said. By way of example, he cited Germany's new governing coalition's efforts to ensure that, as of 2027, new data centers' operations be climate neutral.
The outlook in 2022
The panel members all agreed that the pandemic has taught us just how important it is to have functioning, complete-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 cost-distribution fairness and balance in the digital economy, and to have major internet companies pay a fair share of the costs for the networks they use so extensively. Niebler also views "commercial fairness" as an important issue that needs to come more to the fore in the future.
More information: How sustainable is unlimited data growth on the Internet?
How sustainable is unlimited data growth on the Internet?
An article by Wolfgang Kopf, Senior Vice President for Group Public and Regulatory Affairs at Deutsche Telekom AG.