Telcos try to separate network usage fees from net neutrality debate

Telecom operators distanced their demands for 'network usage fee' from net neutrality, while civil society groups & tech firms questioned the logic. Panellists argued that charging money to deliver data violates net neutrality & that competition drives investments. 99% of interconnection agreements are free of cost. US prohibited such practices in 2015, but Trump administration rolled back the order in 2017. FCC to reinstate 2015 net neutrality protections.

Telecom operators tried to distance their demands for a ‘network usage fee’ from the issue of net neutrality on Wednesday, even as civil society groups and tech firms closed ranks on questioning the logic behind the demand. “Contrary to the misguided opinions being floated in various fora, a fair-share contribution from OTTs (over-the-top) will not violate net neutrality,” S.P. Kochhar, the Director General of the Cellular Operators Association of India said in a statement. Net neutrality is the principle that all data on a telecom network has to be treated equally.

Minutes after that statement was released, panellists on a discussion organised by the technology policy site MediaNama defended network usage fees as a net neutrality violation. “Charging any company any amount of money to deliver data is against Net Neutrality,” Kyung-sin Park, the Executive Director at Open Net, a South Korean internet rights advocacy group, said. “Conditioning data delivery on payment should count as discrimination.”

Barbara van Schewick, an Associate Professor at Stanford Law School, said that recent murmurs of a network usage fee were in fact a ‘disinformation campaign’ by telecom operators, which painted regulators as seriously considering a network usage fee. Dr. van Schewick has been participating in Indian net neutrality discussions for years, and her inputs were cited by the Telecom Regulatory Authority of India in its 2016 rules against discriminatory pricing of data. 

“Ultimately, economic and technical discrimination are just two sides of the same coin,” Dr. van Schewick said, citing judgments in 2020 and 2021 by the European Court of Justice on the issue of net neutrality as opposed to such network fee payments. 

Thomas Volmer, a Netflix, Inc. executive who works with telcos around the world, concurred that outside of South Korea, regulators were not taking this demand as seriously as telecom operators were giving the impression. “What we’re seeing at the moment is really a campaign by large telecommunications companies as opposed to a regulatory trend,” Mr. Volmer said. 

“When you look at how a network is designed, the vast majority of costs are actually fixed relative to traffic,” he added. “It’s about digging roads, it’s about building antennas, all of those components, 90% of the cost has to be invested by the networks regardless of the traffic.” On telcos’ arguments that such usage fees would help struggling investments into their networks, Mr. Volmer said, “Evidence has shown that it is actually competition that is driving investments. Operators invest when they can compete.”

“The vast majority of internet providers across the world are able to run their networks and deploy better broadband infrastructure without receiving any fees,” Dr. van Schewick said, pointing out that over 99% of so-called ‘interconnection’ agreements between networks are free of cost.