David Geary | Big Tech must pay fair share for the Caribbean to have fair shot

It is not often that the Caribbean can claim to be first while also facing the possibility of coming last. On the track, Jamaicans are used to coming first, while often claiming second and third places, too. No one likes to come last, but when it comes to the Internet, the Caribbean may soon find itself lagging far behind the rest of the world.

The future of the Internet is coming soon as the Internet, as we know it, will transform into the ‘metaverse’. This will be a 3D virtual reality world where people will interact, live, work, and shop. Add to this connected devices such as autonomous cars, and we can see that we are about to enter a completely new digital era of human existence. The fact that Facebook has rebranded as ‘Meta’ and is betting its entire future of the metaverse gives us an idea of how soon this future will come.

Unfortunately, we are also about to see a two-tier digital world. The metaverse requires high-speed, high-capacity networks using at least 5G mobile technology or gigabit fixed networks and will only exist in countries that have these future networks. Meta itself plans that the metaverse will be on fixed gigabit networks only. Countries that do not have such networks will be left behind on the old Internet that we have today. In the new metaverse, these countries will virtually be left on a different planet.

EXCLUDED FROM THE FUTURE?

This is a problem for the Caribbean. 5G and fixed gigabit networks are becoming the norm in the United States, Europe, and Asia, with each aiming for 100 per cent coverage by 2030. In the Caribbean, and other developing regions, the Internet is mostly over 3G and 4G mobile networks, and as things stand, the Caribbean is not going to be in the 5G club and will have very few fixed gigabit networks.

This means that the Caribbean will not be on the metaverse. Far from coming first, the Caribbean will not even be in the starting blocks.

How has this problem come about? The Internet has already changed profoundly in recent years. It is now dominated by Big Tech platforms who account for most Internet traffic. According to a recent study, just six Big Tech companies use two-thirds of all Caribbean network capacity, and this is growing every year.

Telecoms operators, such as Digicel and FLOW, have to add more and more capacity to their networks to cater for this growth in traffic. The cost is huge: every year two- thirds of all network investment is now spent on adding capacity to mobile towers and networks just to carry Big Tech video traffic.

This increasing traffic would be fine provided the investment could be recovered. However, Big Tech do not pay operators to deliver their data, so they must recover all of the costs for networks from consumers by massively increasing prices every year. This, of course, is not possible. As investments cannot be recovered, there is no investment case for rolling out 5G networks in the region.

GLOBAL SOLUTIONS

There is a global discussion on potential solutions to this problem. The key issue is that Big Tech free riding on networks has squeezed operator margins to unsustainable levels in order to maintain Silicon Valley’s supernormal profits. Caribbean consumers are subsidising these profits while Big Tech rely on operators’ commitment to an Open Internet and the dominance of their must-carry services to refuse to pay for the delivery of their traffic.

This is a regulatory and policy failure: regulation has not kept up with the modern era and prevents operators from recouping costs from Big Tech. Governments are responding, however. South Korea introduced legislation to oblige Big Tech to pay network operators for the cost of carrying their traffic. This has been very successful, and South Korea is a world leader in broadband. The United States and Brazil are also now considering the introduction of legislation that would require Big Tech to contribute to the costs of networks. The European Union is currently undertaking a continent-wide consultation on regulatory changes to oblige Big Tech to agree payment terms with operators, and last year, it declared that Big Tech platforms must assume their social responsibility by contributing to the cost of infrastructure.

The Caribbean set the pace as it was one of the first global regions to recognise the importance of this issue. The need for Big Tech contributions has been under discussion by operators and governments here since 2014. The Caribbean was also a significant contributor to a key report published by the ITU/UNESCO Broadband Commission for Sustainable Development in 2021, which recommended contributions from digital services,and a new regulatory model that obliges Big Tech to enter commercial negotiations with local companies. In February of this year, the Caribbean Telecommunications Union hosted a meeting between Big Tech and Caribbean operators to discuss how Big Tech can contribute to networks in the region. This meeting was the first of its kind anywhere in the world.

These are examples of how the Caribbean is at the cutting edge of international policy for the digital economy. Big Tech acknowledge that the challenges facing the Caribbean are significant, in particular as cost of carrying Big Tech video traffic is much higher over mobile networks.

WAY FORWARD

To date, there is no agreement on a solution for the Caribbean. This is unfortunate as there are ready-made solutions in other regions that could be followed, including in Peru, where Big Tech already co-invest in broadband networks, and in South Korea, where Big Tech contributions to network costs are a legal requirement.

It is clear that regulation will be required to oblige Big Tech to contribute in the Caribbean. Most straightforward would be a regulation similar to solutions introduced in South Korea or Australia, which oblige Big Tech to negotiate commercial terms or face terms imposed by a regulator. This is also the model under consideration in Europe.

Big Tech are seeking to maintain the current regulatory regime in order to protect their profits and force network operators, and Caribbean consumers, to bear all of the costs of carrying their traffic. Their lobbying seeks to introduce a range of different arguments in an effort to complicate the debate with red herrings to distract from the key issues.

Without Big Tech contributions to the cost of delivering their content, the Caribbean will be left behind. In a two-tier digital world, the Caribbean will not even be at the races. The old model of Big Tech free riding on networks is now broken, and the baton has passed to policymakers and legislators to impose a fair and equitable solution. In the digital economy, Big Tech must play their part and pay their way if the Caribbean is to have a fair shot in the race for the metaverse.

David Geary is an international policy consultant and former general counsel of Digicel. Send feedback to columns@gleanerjm.com.