Apple, Google, Facebook should help cover network costs, European phone companies argue

Fees for content providers based on usage now 'necessary,' France Telecom CEO says

First it was the U.S. carriers demanding an end to what they call a free ride for service providers. Now the European telcos are getting restless.

Bloomberg reports that a number of large phone network operators in Europe believe it's time for bandwidth-hogging service providers such as Apple, Facebook and Google pony up to pay for the billions of dollars necessary to help upgrade data networks increasingly burdened with music, videos and games.

“Service providers are flooding networks with no incentive” to cut costs, France Telecom Chief Executive Officer Stephane Richard said last month. “It’s necessary to put in place a system of payments by service providers as a function of their use.” Richard, who addressed the issue at the “Le Web” conference in Paris on Wednesday, has joined Telecom Italia CEO Franco Bernabe and Telefonica SA CEO Cesar Alierta in what could turn into a cold war with Web companies. As more consumers access the Internet on mobile devices, the cost of building bigger networks may outstrip revenue growth for wireless operators, slicing their return on investment.

Bloomberg trots out numbers from IDC that project mobile data connections in western Europe will increase to 270 million in 2014 -- an average of 15 percent a year. Meanwhile, IDC estimates end-user revenue will decline about 1 percent a year.

All this while annual spending by the phone companies on their networks will jump to $3.7 billion in 2014, or 28 percent from 2009, based on data from research firm Canalys.

So while the carriers see great opportunity in the next few years as more and more customers hungrily consume high-bandwidth content, they're increasingly resentful that they alone bear the burden of skyrocketing costs.

Are unlimited data plans on both sides of the Atlantic facing extinction? And should they be? Weigh in with your comments below.

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