Deutsche Telekom (DT) and Meta have ended their direct peering agreement. DT has accused Meta of “abusing its overwhelming bargaining power” to dismiss the legitimate concerns of the European telecommunications industry. In response, Meta claimed that DT is jeopardizing the open internet and undermining net neutrality by “using its market power to place its German subscribers behind a de facto paywall.”
The dispute traces back to the pandemic when Meta stopped paying for its direct connection to DT’s network and instead pushed for a settlement-free arrangement. Historically, settlement-free agreements have allowed smaller content application providers (CAPs) to compete on a level playing field with larger rivals, mainly when data exchange between CAPs and telecom networks was more balanced. However, as the digital landscape has evolved, a small number of major tech companies—Meta among them—now send vast amounts of downstream data to telco networks, far outweighing the traffic sent in the opposite direction.
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Telecom Operators Push for Fair Share Amidst Growing Data Demands
For years, telecom operators, particularly in Europe, have argued that these massive CAPs should help cover the costs of maintaining the networks that carry their enormous volumes of data. DT had a longstanding payment arrangement with Meta, but this broke down when the tech giant stopped paying. In May, a Cologne court sided with DT, ordering Meta to pay a “double-digit million” euro sum in compensation.
Following the ruling, negotiations between the two companies have stalled. Meta reportedly continues to push for a settlement-free model, while DT insists that Meta should pay for the substantial network resources it uses. With no agreement in sight, Meta has opted to route its traffic through an unnamed third-party transit provider, bypassing DT’s network entirely. DT has expanded its transit capacity with that provider to handle Meta’s data and aims to minimize disruptions for end-users in Germany.
Meta expressed disappointment over the failed negotiations, noting that it maintains settlement-free agreements with thousands of operators globally, including Germany. “These relationships are the accepted global standard and operate settlement-free because they benefit everyone. Content providers like Meta invest in products and services people want to use, and telecom providers like Deutsche Telekom make money by charging for internet access,” Meta stated.
Meta also highlighted its significant investments in network infrastructure, pointing out that it spent EUR 27 billion in 2022 alone to bring its content and services closer to users, reducing the financial burden on telecom operators.
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Power Struggle Over Internet Dominance
DT, however, remains unmoved, framing the conflict as part of a broader issue constituting power dynamics in the digital ecosystem. “This is not just a difference of opinion between two companies, but a question of whether the strongest players will dominate the internet or whether there will be a fair balance between all participants,” the German telecom giant said.
As the debate intensifies, the case brings longstanding tensions between internet giants and telecom operators regarding how the costs of maintaining digital infrastructure should be shared to the forefront, especially as data consumption continues to rise.
