You can’t always get what you want

I cannot get this Google tax idea out of my head. It was announced this week that Vodafone joins Telefonica and other big Telcos in lobbying efforts to get EU approval to charge on-line content providers for the services they provide to Telco customers.

The supposed logic is that these on-line services generate so much traffic that the Telcos need to make huge investments in network capacity which their customers are not paying for. It’s relatively easy to score some cheap points about this e.g.

• Hey Mr. Telco, why don’t you instead charge your customers in accordance with how much bandwidth they consume, the EU wouldn’t mind.
• Or, Telcos make about 1500 billion $ a year and Google makes 23 billion $, how high should that “Google tax” be to have any material impact for you?

But we don’t want to score cheap points, so let’s dig a little further.

Most Telcos are lead by smart people, and they surely know that they will not be successful in this lobbying campaign. There must be something else they are looking for. What could it be? A couple of guesses from my side:

1) There are many important battles going on for Telcos with the EU; international roaming fees, call termination fees and net neutrality (which this topic is part of). Rather than being defensive on all fronts it’s important to be offensive with something.

2) It’s not a battle that can be won near term, but in the future when all Telcos may be bit pipes and most services are provided by on-line players it will be important to have a two-sided business model established.

3) The potential threat from Google to Telcos’ core service revenues is so big that any chance to stop it must be taken. It’s part of the bargaining, “if we give in on “Google tax” you have to give us a slice of the advertising revenues” or something like that.

Whatever the real agenda behind the Google Tax lobbying campaign is it’s more likely about the longer term role of Telcos in the digital services value chain rather than getting EU support to charge on-line service providers for what Telcos failed to charge their customers in the first place.

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