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EU “Fair Share” Contagion: Caribbean Telecoms Operators Seek to Deepen Their Monopoly Strangleholds

On Friday, 23rd June, Caribbean telecommunications operators (telcos) held a meeting in Miami to fine tune their strategy to force Big Tech companies to contribute financially to regional telecoms network infrastructure. Hosted by the Caribbean Telecommunications Union (CTU), and taking a similar perspective to the “fair share” proposal currently being debated in the European Union, regional network operators are arguing that over-the-top (OTT) service providers such as Meta (Facebook, Instagram and WhatsApp), Alphabet (Google), TikTok, Netflix, Amazon and Microsoft are responsible for 67 percent of the total Internet traffic in the Caribbean, but make no contributions or investments toward local delivery networks. Moreover, they further asserted that a market failure is occurring with resultant stalled revenues for telcos, and limited prospects for future growth.

This “fair share” argument is literally reviving antiquated telecoms regulations from the era of the public switched telephone network (PSTN) and circuit-switched networks. There is no evidence that a real problem or market failure exists in the Caribbean telecoms sector, and there has been no credible evidence warranting the introduction of network fees. I challenge Caribbean network operators to provide conclusive data that shows their networks are over capacity and that they are financially incapable of investing in their own infrastructure, especially when we consider that consumers are already paying for the use and improvement of their networks (Caribbean consumers are currently subjected to some of the highest mobile data costs in the world)—hence ISPs effectively want to charge twice for the same infrastructure. The Internet has proven its ability to cope with increasing traffic volumes, changes in demand patterns, technology, business models, as well as in the (relative) market power between market players. These developments are reflected in the Internet Protocol (IP) interconnection mechanisms governing the Internet, which evolved without a need for regulatory intervention. There are multiple ways to finance network investments that don’t result in irreparable harm to the Internet’s technical architecture, the rights of consumers, and the overall Internet economy (e.g., joint ventures, private investors, spinning off segments into separate companies and seeking limited financing, special purpose vehicles based on public infrastructure funds, etc.).

From a technical standpoint, the Internet is based on different networks negotiating simple connection agreements between each other, based on interoperable technical standards. What Caribbean telcos will more than likely achieve—similar to their European counterparts—is where consumers will be restricted to only accessing content and services that are subject to agreements between ISPs and OTTs, and the quality and conditions of the content delivery will also be subject to the negotiated commercial arrangements. The technical danger of requiring network fees will invalidate the global and open Internet model for permissionless innovation and can lead to a highly fragmented Internet. It is a terrible policy suggestion for our region, and for the Internet as a whole, to suggest ‘rules’ that seek to artificially regulate how IP networks are managed.

This proposal also presents a rights-based threat to Internet users across the Caribbean. One of the most sacrosanct rules of the Internet is ‘net neutrality,’ which is that Internet service providers (ISPs) must enable access to all content and applications regardless of the source and without favouring or blocking specific websites or services. Given that ISPs also own what is known as the “last mile” (the physical connectivity to our homes), they can filter what content or services we are able to access, as well as determine the quality of our access. They can do so by blocking content, throttling network performance, and by introducing prolonged congestion that affects consumers negatively. These machinations by Caribbean network operators can potentially transform the existing landscape into one where they can negotiate deals whereby traffic from certain businesses can be prioritised and where the prioritisation of content can become part and parcel of such deals, thereby affecting the quality of experience for consumers across the region while providing an unfair advantage to a small group of players (monopolies) and further cementing their power in “last mile” delivery.

Finally, I want to touch on the possible disastrous effects this proposal could have on the Caribbean digital economy. How long will Big Tech be willing to sustain technology investments for regional network operators and ISPs? There’s no precedent anywhere on the planet where one tech company indefinitely finances the infrastructure of another tech company. Network operators are in business to manage the performance and capacity of their networks to maintain a satisfactory quality of service for their customers. They have been doing this for years by laying fibre and upgrading equipment to ensure their networks are primed to accommodate future growth. Moreover, the proposed fee system has zero guarantees that cost savings will trickle down to consumers in the form of lower prices or infrastructure enhancements. What it will do is reinforce the monopoly or duopoly arrangements in most Caribbean markets, further solidify ‘last mile’ monopolies and create distortion in competition, thus disincentivising other companies from investing in infrastructure or content delivery. Also, has anyone considered the influence Big Tech will have on Caribbean network infrastructure when they are committing large sums of money to bankroll network upgrades? I am certain that most of these contractual agreements will not be in the best interests of Caribbean nations and their citizens.

There was a similar proposal in the European Union on content provider fee charges going back as far as 2012. At the time, the Body of European Regulators for Electronic Communications (BEREC) was quite vocal about their disagreement with the network operators’ proposal. In October 2022, BEREC once again gave a negative opinion on the current proposal citing issues related to net neutrality, lack of competition, and stifled innovation, among others. The Caribbean followed suit in 2014, where telecoms operators proposed that regional governments introduce regulations that forced content providers and OTT service providers to foot the bill for network upgrades. The proposal fell short because of strong advocacy from rights-based organizations in the Internet ecosystem and the reticence of many governments at the time.

Caribbean regulators have largely underperformed in terms of effective governance and oversight of their respective telecoms industries, and now much like the European Commission, they are signaling through lobbying arms like CANTO and ‘arbitrators’ like the CTU that the profit motives of the telecoms industry are more important than consumer interests, citizens’ rights, and the overall health of the Internet economy.

Will regional governments and regulators continue to be captured by telecoms operators?

By Niel Harper, Chief Information Security Officer, Chief Privacy Officer, Internet Governance Researcher

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