TPG CEO Wants Big Tech Paying More For Bandwidth
TPG Telecom CEO Iñaki Berroeta wants telco policies revamped in order to make over-the-top services such as Facebook, Netflix, Google, and Apple, pay for the bandwidth their services use.
Talking at the CommsDay Summit on Wednesday, Berroeta said “the connectivity we provide has enabled the nation’s shift to new ways of hybrid working, it’s led to an acceleration in the digitisation of the economy, and it’s provided the critical infrastructure other industries such as streaming, gaming and entertainment have relied, thrived and enjoyed a free ride upon.”
Between 2016 and 2021, the telco sector’s underlying return on capital fell from 8.3 percent to 2.8 percent.
Optus’ vice president for regulatory and public affairs Andrew Sheridan used the same summit to call for the same changes in the current regulation, pointing out that traffic is growing by 40 per cent a year, and it’s telcos taking the hit.
“Telco sector profits have plunged so that today the smallest of the big four banks generates four times more profit than our entire sector,” Sheridan explains.
“Businesses that aren’t profitable, can’t invest”
The traffic surge is driven by OTT operators whose services chew up more bandwidth than necessary by streaming at high bitrates, “diverting future value for the whole country”.
“During the heart of the lockdowns, we asked all the streaming companies to reduce their bitrate so we that could manage the traffic,” he said.
“What happened? Nobody noticed.”
Berroeta says its so dire that it could impact the success of Australia’s 5G rollout
“Connecting consumers and businesses to the benefits of 5G will only be possible if we create the right conditions for greater competition and continued investment in telco infrastructure”, he said.
“As cities become smarter, industries automate, and we continue to use our mobile and broadband connections to work, play and stay productive, reliance on connectivity will soar in the coming decades.
“But in an industry where costs are going up and revenues remain flat, it is essential we invest in ways that will deliver sustainable returns.”