An odd telecom industry term – “large traffic generators” – recently made it into the European Commission’s “fair share” consultation about EU network fees. This misleading framing ignores the fact that it is telcos’ own customers that request, and thereby generate, data.

Christian Borggreen is Senior Vice President & Head of CCIA Europe.

Next week will mark the conclusion of the Commission’s exploratory consultation on the future of the EU telecom industry. Problematically, the consultation adopts the loaded term “large traffic generators” (LTGs) and seeks to identify which companies should be designated as LTGs based on criteria such as the amount of data traffic over a threshold.

The framing of this consultation echoes calls from telecom lobby groups such as GSMA that demand payments from “the companies generating the largest amounts of [internet] traffic,” also known as network usage fees.

Readers might be left with an image of out-of-control traffic generators that spam data unsolicited, but let others (telcos) clean up their mess. This misrepresentation has already been dismissed by the body of EU telecom regulators (BEREC). It is telcos’ own customers who generate data traffic with their requests for online content and services of course – and they have already paid telcos once for access to this content.

Let me offer just two examples of widely-used online services – cloud computing and content delivery networks (CDNs) – to explain why BEREC is right and why it is so problematic that the Commission has adopted this LTG framing.

The power of cloud computing and CDNs

Cloud services use data centres to keep customers’ data safe and secure by storing it online, allowing users to access data when they want and from where they want. Everyone is familiar with “the cloud” of course, all the apps on our phones run on it after all.

The term CDNs, however, might be less well-known, even though we all benefit from them every day. They play an important role in delivering popular online content such as websites, videos, music, and games to you. CDN providers temporarily store data in so-called caches. These caches are local servers spread all over Europe, including within telecommunications networks, that store copies of files containing popular content as close as possible to end users, with the ultimate goal of reducing the cost and latency of delivery.

The larger CDN providers have invested in setting up thousands of servers around the globe, with a mix of large aggregated clusters at the edge of networks and small-footprint deployments deep inside telco networks. These CDNs help organisations to distribute their data as fast and efficiently as possible to end users. And just like cloud services, CDNs do not originate any content, nor do they generate any data traffic by themselves.

CDN providers actually often collaborate closely with telcos, e.g. by hooking up caches with popular content to local telecom networks, in order to help bring the data as close as possible to telcos’ customers, as well as planning connectivity for optimal traffic delivery.

Fundamentally flawed

Internet service providers (ISPs) can easily measure their own users’ requests for data and content, but they can’t identify which online services or websites are responding to data requests – and how much data is being sent back – because that traffic could be coming from a service or site that uses a cloud provider or CDN.

As a recent Plum study points out: “If a service is hosted on a cloud platform, the packets would carry the identity of the cloud platform, not the service. If a piece of content is served via a CDN, it would carry the identity of the CDN.” In other words, when a streaming platform uses a third-party content delivery network to distribute its movies to paying subscribers, like most do, the traffic will be labelled as coming from the CDN, not the streamer.

In practice, telcos simply have no idea of the real share of traffic represented by organisations that use CDNs or cloud hosting. The only “percentage level of traffic” on their network that they can determine (which the Commission’s consultation asks ISPs to provide to identify LTGs) is that of the cloud or CDN providers that act as facilitators.

Any content and application provider (CAP) – regardless of its size – relying on the cloud or CDNs would thus count towards a possible large-traffic-generator threshold, and also end up being charged for the network fees being imposed on the provider they use. While telcos pretend that their plans only target large CAPs, the network fees they are after would in fact hurt a much wider range of players using digital services.

It’s not large CAPs that will take the biggest hit

Smaller content and application providers that are just starting out will not build their own network infrastructure or data centres. They will use established cloud and CDN providers that have economies of scale and can quickly increase capacity if the CAP’s service turns out to be popular. Even a popular home-grown European streamer like Spotify doesn’t operate its own infrastructure to host and distribute content. Their business model is providing customers with a vast music library, leaving the hosting and delivery of that content up to third parties.

But if cloud and CDN providers are forced to pay EU network usage fees, they will have to pass on those costs to any CAP whose services they host or deliver and count towards the earlier-mentioned threshold, including small and medium-sized ones.

The solution

Both telco lobbyists – and now the European Commission – seem to entertain the idea that so-called “large traffic generators” need to be identified and forced to financially contribute to telcos’ network investments. This simplistic thinking simply ignores how the internet works. Given that it is not possible to identify from which website, service, or platform traffic stems, all digital players would end up paying telcos through network fees.

The Commission’s consultation, and the use of loaded terms such as “large traffic generators,” imply that cloud and CDN services are part of a “problem”. In reality – by helping minimise traffic volumes, improve performance for telco customers, and protect websites and applications – clouds and CDNs are very much part of the solution.