As telecoms operators and their executives get ready to descend on Kigali for the 2023 edition of the Mobile World Congress Africa conference, one item that is likely to be on the agenda — officially or unofficially — is a push to get the likes of Google, Facebook and Netflix to share in the costs of building and maintaining network infrastructure.
In the same way that vehicle owners pay taxes to keep national roads in good repair, telecoms are increasingly calling for internet companies to pay for part of the upkeep and expansion of telecoms networks, which are essentially the roads or highways of the internet.
While SA’s biggest operators, Vodacom and MTN, have been vocal about the issue over the years — given the billions spent on network expansion and maintenance each year — little progress has been made in the local market.
African operators will be hoping that increasing pressure in Europe will help to boost local discussions on the matter.
Recently, the CEOs of 20 of Europe’s largest mobile network operators penned a letter to the EU calling for rules and regulations that would force large tech companies to pay a type of “network tax”, or at least contribute to the costs of the traffic that flows to their systems.
In the letter, seen by Business Day, operators including British Telecom (BT), Deutsche Telekom, Telefónica and Vodacom’s parent Vodafone, argue “a fair and proportionate contribution from the largest traffic generators towards the costs of network infrastructure should form the basis of a new approach”.
“While the telecoms sector has delivered improved connectivity, retail prices for telecommunications services have been generally falling over the past 10 years at the same time as costs have increased,” the group said, adding that new technologies “will raise demands on the underlying network infrastructure, further increasing costs”.
In the coming week, the global telecoms body GSMA will be hosting Africa’s industry players in Kigali for its annual conference, which presents an opportunity for business leaders and regulators to discuss the issue.
The GSMA appears sympathetic to the cause with the body saying it commends the EU leadership for initiating “an honest discussion [and] that companies benefiting the most from the use of European networks should play a part in contributing to infrastructure investment in Europe”.
John Giusti, chief regulatory officer at the GSMA, believes it is only fair that the companies generating the largest amounts of traffic on networks “should contribute to the required infrastructure investment”.
Peter Takaendesa of Mergence Investment Managers — who has tracked and covered the sector for more than a decade — says there may be a lot to overcome for operators to push such an agenda locally. Global companies have enjoyed “solid negotiating power in SA judged by outcomes with BEE compliance and the recent Takealot and MultiChoice complaints about international companies not being subjected to the same rules”.
Ultimately, he thinks it is unlikely that SA will be among the early adopters of the policy reform ... “if at all”.
Effective policy
One obvious hurdle for the continent’s operators is getting different regulators to take the issue seriously enough to create and implement effective policy around it. European operators benefit from their ability to lobby a central body in the form of the EU.
In addition to land-based installations that large internet companies have been working to provide on the continent, they have also subsea cables and satellite networks.
In 2022, the Equiano cable landed in SA and is Africa’s highest-capacity subsea internet cable. Google is the main funder, with the cable running from Portugal along the west coast of Africa to Cape Town. Its arrival in SA is in partnership with Telkom’s infrastructure unit Openserve.
That cable system competes against 2Africa, a huge development led by Facebook parent, Meta. Amazon has been building satellite infrastructure, inking a deal with Vodacom recently to provide better communications in remote areas.
Mobile operators argue that even this level of investment is still not enough to cover existing and future requirements, especially in 5G.
A study commissioned by Deutsche Telekom, Orange, Telefónica and Vodafone put a value of at least €15bn a year on network costs for access to what they call large traffic originators such as TikTok, Netflix or Google’s YouTube.
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