Digital infrastructure: a challenge to overcome

2023-05-22 07:54:50

• User pays twice

• With his data and with his phone bill

• Companies more powerful than countries

«When a product is free, the product is you”. This maxim has long been used to explain (and warn against) the business model of Google and YouTube (Alphabet), Facebook and Instagram (Meta), and the Chinese platform TikTok, among various other social networks, applications and content services. . These companies offer their services “for free” in exchange for the user providing huge amounts of personal data, ranging from geolocation and shopping habits, to health, state of mind and beliefs. personal.

Tech titans are a major source of power for the countries where they operate, and charging these companies a toll for using the networks would be tantamount to generating tension with nothing less than the United States and China. (Ph:DR)

But that’s not all. Indeed, much of the infrastructure needed to power these businesses is also paid for by the user. Consumers not only entrust (voluntarily or not) their data to these giants so that it can then be monetized in the form of targeted advertising, they also pay for fiber optic networks and antennas (through telephone bills and mobile phone top-ups) that are essential to the business of tech giants. The same goes for streaming services such as Netflix and Spotify, which charge a monthly subscription to access their content, but are now venturing into the realm of advertising in the form of “advertised subscriptions” – which could very well mean that customers will give up their personal data.

The user pays twice: with his data and with his phone bill

Twenty years ago, telecommunications operators were among the largest and most influential companies in the world. This influence has diminished over the years, and they have become mere intermediaries that connect users with online service providers, despite efforts to add value to services (TV and streaming, insurance for phones laptops, video surveillance). This explains, together with increasing competition in the Internet access market, why many of these companies have lost part of their stock market value over the past decades and why their profits have remained stable, compared to the growth boom in revenue, profits and influence of big tech companies.

For years, the main telecommunications operators, in particular, European operators such as Orange, Telefónica and D-Telekom, have been asking that the big technology companies take over part of the development of telecommunications networks. This change would go against the principle of net neutrality that the Internet has been based on since its inception and which is a central aspect of the business models of many digital companies.

Whenever Claro (Latam), Telefónica (Europe), Rogers Telecom (Canada), Barthi Airtel (India) and MTN, Orange, Marroc Telecom, (Africa) – to name just a few of the major internet service providers the Internet in the world – are increasing their connection capacity with new infrastructures (cables, fibers, pylons), half of these new “data pipes” are flooded with bytes from sites such as Netflix, TikTok, YouTube and Instagram.

Almost all of these companies are American and, to an increasing extent, Chinese, and this factor is becoming increasingly relevant in a geopolitical context. At the recent Mobile World Congress in Barcelona, ​​Thierry Breton, Commissioner for Internal Market and Services at the European Commission, said: “We will have to find a funding model for the huge investments needed that respects and preserves the fundamental elements of our European acquis: freedom of choice for the end user” and “the freedom to offer services under fair and competitive conditions”.

It might be necessary to strike a balance between the principle of “net neutrality” and the fact that the majority of Internet traffic is actually monopolized by a few companies, by introducing the idea that large technology companies should contribute financially to the maintenance, upgrading and expansion of these infrastructures. This is especially true at a time when the development of web3, blockchain, 5G, 6G and the metaverse will require millions of dollars of investment in all countries that do not want to be left behind. in the race for the global digital economy.

If the big tech companies, which generate most of the data flowing through cables and antennas, were to pay for some of the hardware, it could have a major impact on the shaping of digital business models. Traditional telecom operators would be able to invest more, increase revenues and profits, or do both. For their part, consumers could benefit from the deployment of higher-speed and better-quality networks, see their telephone bills drop, or a combination of the two. Some of this spending would be passed on to businesses, which would have to bear the cost by raising their prices, improving their efficiency or reducing their profits.

Geopolitics of the Internet: companies more powerful than countries

Tech titans are a major source of power for the countries where they operate, and charging these companies a toll for using the networks would be tantamount to generating tension with nothing less than the United States and China. This is what happened recently, when some European countries, such as Spain and France, created a “Google tax” on the biggest digital advertising services, in order to compensate for their tax practices consisting in diverting a part of their profits to countries with lower taxes. Mr. Trump has categorically rejected any move that could harm the US digital giants and has threatened to impose trade barriers on countries that pursue this strategy.

Only the global economic weight of the European Union can put this debate on the table. Even the most powerful members of the Union, such as Germany and France, would not be able to do this alone. However, it is one thing to raise the subject and quite another to achieve it. The Netflix CEO dismissed EU Commissioner Breton’s idea less than 24 hours after it was mooted.

Igor Galo Anza


Price increase and deterioration connection quality

QWhat is the relationship between Internet speed and economic development in Africa, Latin America and Southeast Asia? Lots of things, actually. At present, no country or government has the means to act alone against companies such as Bytedance, Netflix and GAFAM. Each of these companies has a market valuation (and revenue) that exceeds the GDP of most countries – and the integration systems in these regions do not currently have the authority or capacity of the EU to do so. engage in a similar debate-.

If the change that the European Union apparently wants to promote does not materialize in one form or another, telecommunications companies will continue to bear the full cost of modernizing digital infrastructures. This will result in slower deployment of new technologies, lower profits and weaker investment by regional telecom operators, higher prices and deteriorating connection quality for users, or a combination of all of these. factors. In addition, it could favor the increase of the digital divide between the least developed countries and digital powers like the United States and China, although on a more moderate scale. It turns out that these two powers are also the main exporters of current digital services and content.o

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