(This post is also available in Italian)
In recent weeks, certain market players have sought to use amendments to the Italian budget legislation to introduce so called ‘fair share’ contributions to benefit large telecom operators. The idea of a tax on cloud providers, used to fund telecom operators, has been discussed and rejected as unfair, unnecessary and damaging the digital economy numerous times in multiple jurisdictions. CISPE calls upon Italian legislators to act now to stop the fair share zombie.
The Italian proposals are aimed at ‘user parties’, initially target the largest content and cloud providers, but they will inevitably also damage Italy’s own cloud service providers and technology firms. CISPE, the association representing European Cloud Infrastructure Service Providers in Europe, which includes 17 Italian operators as members, urges Italian lawmakers to reject this proposal outright before significant harm is done to the growth of the cloud in Italy.
In particular, a number of amendments to the next financial bill – initially rejected and then presented again in the Senate debate – provide for the introduction of a network usage fee to be paid by operators who ‘generate’ a certain volume of traffic, regardless of whether they qualify as ‘gatekeepers’.
The proposal suffers from multiple logical and technical issues that would produce clear market distortions.
First of all, defining cloud service providers as ‘large users’ is erroneous, since the traffic is not generated by the content or service provider, but by the customer. After all, customers pay their Internet Service Provider (ISP) for connectivity to access online content. Under the proposal, telecommunication operators would be remunerated twice for the same service: once by the user and a second time by the content and/or service provider. This approach contradicts the basic principles of the current functioning of the Internet and is contrary to market logic.
In addition, the draft law does not quantify the amount of the contribution and does not provide any basis for calculation. Setting the level of payment is left to agreements between the obliged parties and the network operators. Not only does this make fees unpredictable and extremely variable, but it could lead to anti-competitive pricing effects and increased prices for customers.
In our view, these amendments are simply a replay of an argument that was discussed – and comprehensively rejected – at European level in 2022-2023. The potential negative effects of such a tax cannot be overstated. They are especially unfair to smaller cloud and CDN providers who already invest significantly in infrastructure (servers, network equipment, while operating in a more competitive market than telcos.
It is essential that Italian lawmakers see this amendment for what it is – a stealth tax on cloud customers, including individual consumers as well as public and private sector organisations – that will only benefit one or two large incumbent telecom operators to the detriment of the entire digital economy. This zombie tax has been killed off by sensible voices again and again – don’t give it the chance to come back to life in Italy.
For more information on the wider issues of an internet traffic tax, please read BEREC’s October 2022 assessment and our position paper from May 2023. CISPE stands ready to work together with Italian authorities to find more appropriate solutions for any issues identified by the Italian Government.