Vodafone Lobbies for Google Tax

By Tara Seals

Vodafone plc and Telefónica are taking on Google with the intent of making it and other online content providers pay for network usage.

Specifically, Vodafone plans to petition the European Union to “facilitate bilateral agreements between telecom operators and online content providers like Google.”

The president of Vodafone Spain, Francisco Roman, has outlined the plan, adding to a drumbeat that began earlier this year with Telefónica CEO Cesar Alierta declaring his wish to charge Google and others for bandwidth. Vodafone CEO Vittorio Colao has also asked for an antitrust investigation into Google’s activities.

Google does admittedly dominate the Internet. More importantly as a catalyst for Vodafone, it ranges far into phone company territory these days. Over-the-top services like Google Voice, mobile activities (Android, WiMAX) and a fiber play in the United States have incumbents nervous. AT&T Inc. has argued that Google Voice, for instance, is essentially a phone voice service that is not subject to the same phone service regulations, taxes and fees as voice service from, say, AT&T. And that means, in AT&T’s mind, that Google has an unfair competitive advantage.

The other arguments at play involve the monetization of skyrocketing data usage. “Twenty percent of Web users account for 80 percent of the traffic,” said Roman, echoing sentiments from AT&T earlier this year about bandwidth hogs. “This state of affairs cannot continue indefinitely. Maintaining a system in which everyone is charged the same, regardless of their Internet consumption or use, will eventually result in network collapse.” He cited the cost of upgrading the network, the increased traffic, and the inability to grow the data revenue needed to pay for it.

But rather than instigate more tiered pricing for end-users (the telco already does have premium plans in place), or policy implementations that would scale back on excessive usage at peak times, Vodafone and Telefónica are lobbying for what some have called a “Google Tax.” The scheme would allow network owners to charge content providers for bandwidth and network quality for OTT services.

Vodafone plans to present its ideas within a few weeks it to EU information society commissioner Neelie Kroes during a public consultation on Net neutrality. The EU has rather stringent laws when it comes to Net neutrality, which should make for interesting debates as events unfold.