The EU’s Network Usage Fees
The Framework
The European Commission is evaluating a “fair share” proposal that would require large content and application providers, such as Netflix, YouTube, and Amazon, to pay fees to European internet service providers (ISPs) in exchange for delivering data to consumers.[1] Under this proposal, ISPs would be compensated directly by content providers based on the volume of traffic delivered over their networks.[2] This approach would mark a shift from the current model, in which end-users pay ISPs for access to content of their choice. The policy is being developed as part of the EU’s broader Connectivity Package. A formal consultation process on the proposal was launched by the European Commission in early 2023.[3]
Implications for U.S. Technology Leadership
Imposing network usage fees on content and application providers (CAPs) would weaken U.S. tech leadership by directly targeting the most globally competitive American digital firms that dominate streaming, social media, and cloud services. The European proposal—despite mounting evidence that telecom operators have not faced proportional cost increases due to rising traffic—would force U.S. companies, such as Google, Amazon, Netflix, and Meta, to subsidize European telecom infrastructure, effectively treating their popularity as a liability.[4] This amounts to a regionally discriminatory toll on American innovation, especially given that no comparable fees exist elsewhere in the world.[5] It also undermines the core architecture of the internet, where traffic delivery is user-initiated and content delivery is already heavily subsidized by CAPs’ massive investments in content delivery networks (CDNs), peering, and submarine cables.[6] These are critical enablers of low-latency access and performance across the EU—assets that European ISPs benefit from without reciprocating.
Mandating one-way payments in favor of ISPs also distorts the balance of economic power in the internet ecosystem, enabling large European telecoms to discriminate against or throttle traffic from U.S. services that do not agree to their terms. This not only contravenes net neutrality principles but also opens the door for self-preferencing by ISPs that offer competing content or cloud services.[7] As peering disputes escalate, such as the standoff between Meta and Deutsche Telekom, U.S. providers face rising barriers to delivering services at scale in Europe.[8] If implemented, the EU’s “fair share” proposal would encourage other regions to adopt similar frameworks, fracturing the global internet and creating an uneven playing field for U.S. firms that rely on open, interoperable, and efficient cross-border infrastructure to remain competitive.
Endnotes
[1]Digital Policy Alert, “Mexico: Adopted Provisions Applicable to Electronic Payment Fund Institutions Under the Regulation of Financial Technology Institutions Act Including Location of Computing Facilities,” January 15, 2021, https://digitalpolicyalert.org/event/5873-adopted-provisions-applicable-to-electronic-payment-fund-institutions-under-the-regulation-of-financial-technology-institutions-act-including-location-of-computing-facilities.
[2] European Commission, “Connectivity,” Shaping Europe’s Digital Future, https://digital-strategy.ec.europa.eu/en/policies/connectivity.
[3] Digital Policy Alert, “Consultation Closed on the Future of the Electronic Communications Sector and Its Infrastructure,” May 19, 2023, https://digitalpolicyalert.org/event/9367-consultation-closed-on-the-future-of-the-electronic-communications-sector-and-its-infrastructure.
[4] Robert D. Atkinson, “Go to the Mattresses: It’s Time to Reset U.S.-EU Tech and Trade Relations,” Information Technology and Innovation Foundation, October 21, 2024, https://itif.org/publications/2024/10/21/its-time-to-reset-us-eu-tech-and-trade-relations/.
[5] Ibid.
[6] Jessica Dine and Joe Kane, “Feedback to the European Commission on the Future of the Electronic Communications Sector and Its Infrastructure: Fair Contribution by All Digital Players,” Information Technology and Innovation Foundation, May 18, 2023, https://itif.org/publications/2023/05/18/feedback-to-european-commission-on-future-of-electronic-communications-sector/.
[7] Ibid.
[8] Barbara van Schewick, “A Deutsche Telekom Shakedown: Will Instagram, Facebook and WhatsApp Slow to a Crawl in Germany as DT Tries to Get Paid Twice, and Will German Regulators Have the Courage to Stop DT’s Bullying?” Stanford Center for Internet and Society, September 25, 2024, https://cyberlaw.stanford.edu/blog/2024/09/a-deutsche-telekom-shakedown-will-instagram-facebook-whatsapp-slow-to-a-crawl/.