An article by Wolfgang Kopf, Senior Vice President for Group Public and Regulatory Affairs at Deutsche Telekom AG.
YouTube generates the most data traffic on Telekom's mobile network: In 2021, it averaged 357 terabytes per day, an increase of a remarkable 96 percent over the previous year. Today, mobile networks carry almost three hundred times more mobile traffic than in 2011. There is no question about it: the digital infrastructure is the backbone of society, education and the economy - especially in times of pandemics. Rapidly increasing data traffic requires high investments in the continuous expansion of networks: around 300 billion euros across Europe by 2030. At the same time, fiber optics and 5G, the most advanced network technologies, contribute to greater sustainability and climate protection due to their higher efficiency.
Wolfgang Kopf, Senior Vice President for Group Public and Regulatory Affairs at Deutsche Telekom AG.
Nevertheless, unchecked growth in data traffic - the bulk of which is accounted for by a handful of global Internet companies - is also driving energy consumption. According to one forecast, the ICT share of global CO2 emissions could rise to over 14% by 2040. The lion's share of this is caused by streaming, favored by low incentives for efficient data management. The focus is already today on Big Tech's data centers. Ireland for example has welcomed these data centers for a long time but is now changing course. The reason: the state-owned electric power transmission operator EirGrid expects "hyperscale" data centers will use almost 30 percent of Ireland's electricity by 2028 - a huge challenge for the country's power supply. Google's planned new data center in East Brandenburg fell through as there is not enough water in the region to meet the data center's huge water consumption. In Frankfurt, the data center boom is thwarting the city's climate goals, prompting calls for a "data center master plan" with a comprehensive climate protection concept.
How can the data tsunami be stemmed to reduce power consumption and environmental costs? In a recent publication, economists from the Technical University of Aachen and the Vienna University of Economics and Business Administration have modeled different scenarios of how the future energy consumption caused by video streaming could develop. In the worst case, energy consumption could increase eightfold by 2030. However, the authors also show that intelligent regulation could succeed in keeping energy consumption almost constant. According to the authors, imposing a transit fee on big streamers driving most of the data traffic is the best regulatory approach. Similar to a CO2 tax, this would set a price signal and create incentives to optimize traffic flows.
To date, the major Internet companies have used their market and negotiating power to push through ever lower interconnection charges on the Internet or to abolish them altogether. This is supported by laws designed to preserve so-called "net neutrality." Because net neutrality consistently defines procedures for data compression, intelligent routing and other sustainable procedures that increase network efficiency and reduce energy consumption as unacceptable interference, it has become a major source of CO2 emissions. But there is also growing resistance to the imposed zero-price policy. In South Korea, the success of the hit series "Squid Game" led to a massive increase in traffic - which is why network operator SK Broadband is suing Netflix to cover the cost of the surge in network traffic. In the U.S., FCC Commissioner Brendan Carr calls for ending Big Tech's free ride on the Internet, requiring Big Tech to start paying its fair share for Universal Service. In Europe, the CEOs of major telecommunications companies - including Tim Höttges - also call for big tech platforms to fairly contribute to network infrastructure investment.
One thing is certain: unchecked increases in traffic volumes caused and monetized by a few large Internet platforms are not sustainable. The resulting costs for network expansion are shouldered by the telecommunications industry to prevent bottlenecks in the network and to be able to offer customers good video quality. At the same time, rising traffic volumes are causing environmental costs, which are also being passed on by the Internet companies. Policymakers would therefore be well advised to set price signals and thus create incentives to optimize traffic flows.