Alfons Oliver, partner at Axon Partners Group, thinks some of the scathing analyst criticism of the report published last week by the European Telecommunications Network Operators' Association (ETNO), a telecoms lobby group, was well and truly off-beam – at least when directed at Axon.

Dean Bubley at Disruptive Wireless, in a LinkedIn post, didn't pull any punches after reading the study, which was prepared by none other than Axon Partners Group Consulting.

Entitled "Europe's internet ecosystem: socio-economic benefits of a fairer balance between tech giants and telecom operators," the report essentially concludes that US Big Tech is unfairly not paying its way in Europe "while generating network-related costs of tens of billion euros."

Figure 1: Alfons Oliver thinks analyst criticism directed at Axon for its recent ETNO-commissioned report is off target.
(Source: Andrey Kuzmin/Alamy Stock Photo)

Bubley argued that the report overly relied on generic and publicly data traffic stats, and so it couldn't be a useful guide to European policymaking.

Since there's no breakdown of how and where mobile data traffic is generated, for example, the report – in Bubley's view – doesn't show where network investment is needed.

He speculated that if 80% of mobile data is indoors on smartphones, the benefits for GDP, energy use and so on might be better achieved with Wi-Fi upgrades or third-party indoor cellular systems.

"Without that granular data, it's not possible for policymakers to create any meaningful decision on the suggested techco 'investment' in network infrastructure," wrote Bubley.

Bubley is not a lone critic.

"Axon doesn't use actual financial and traffic data from broadband providers," John Strand, CEO of Danish advisory group Strand Consult, told Light Reading.

"Axon uses aggregate, publicly available data to argue that payments from Big Tech could increase jobs, reduce energy consumption, and spur investment in 5G and fiber. It looks more like an opinion paper than an operator study."

Calm down

Oliver, speaking to Light Reading, and not wanting to get engaged in a tit-for-tat social media war, expressed his own personal views.

He dismissed the criticism about a lack of granular data and pointed out that Axon relied on third parties for much of the data used in the report.

"Any considerations on data granularity, if anything, may relate to previous [newly unveiled data (PDF)] from Frontier Economics quantification on OTT-driven costs for EU telcos, and BCG's work on the quantification of required investment to meet EC's Digital Decade targets," said Oliver.

"None of them come under the realm of Axon's work for ETNO and, therefore, we are not in the best position to comment."

Oliver maintained that the "key messages and conclusions of the report wouldn't be affected if we considered any more granular data on our own."

As for recommending network investment priorities, Oliver didn't see a reason to make any.

"Discussion on micro cell or macro cell investment allocation has nothing to do with Axon, as such considerations came under BCG's study, and do always need to be interpreted in the light of the EC's Digital Decade targets," he said.

The objective of the report, maintained Oliver, was to stimulate industry dialogue.

"It is not written that European Telcos have to be financially responsible for fulfilling the EC's Digital Decade targets," he said.

"Let's have a fair discussion of who should contribute and by how much. Ultimately it will be decided by the European Commission."

More Bubley gripes

Light Reading got on the blower to Bubley to talk about the idea of "fairness" when it comes to making US Big Tech contribute to European infrastructure costs, and whether the report could indeed encourage useful industry dialogue – even if he did believe the study was flawed. Bubley was unconvinced.

"It's an analysis which essentially says if the Internet companies pay money to telcos, they will be able to upgrade their 4G networks to 5G faster, which will end up with reduced costs and reduced energy consumption," he said.

"There are multiple fallacies involved in that."

For one thing, asserted Bubley, the report overlooks Jevons paradox – the idea that if you give people more of something, like speed, they will tend to use more of it.

The classic example of Jevons paradox, when Light Reading did a cursory Google search, is the observation that England's consumption of coal jumped after the introduction of efficiency improvements in steam engines.

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"The estimates they have for energy consumption with this idea that 5G can be ten times as energy efficient as 4G is nonsense," added Bubley.

"The other fallacy is that traffic levels relate to GDP. It's correlation versus causation."

He continued: "If you want to charge [Big Tech] an access fee for its role as gatekeeper, the question is whether the reciprocal is also true. Should operators be paying access, say, to YouTube content? At the moment, they don't have to pay a license for that."

Bubley has little sympathy for the ETNO view of disliking the current Internet model simply because telcos find it hard to make money out of it. His advice for operators who are unhappy about this state of affairs is blunt.

"Unless you are compelled by law to sell public Internet access, then don't sell it."

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— Ken Wieland, contributing editor, special to Light Reading