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Europe’s Broadband Battle

LONDON – Among the many challenges facing the new European Commission is determining how to provide ultra-fast broadband Internet access to all 500 million European Union residents without raising taxes or bankrupting Europe’s telecommunications companies. This imperative has led many to demand larger contributions from Internet giants like Google, Netflix, and Facebook, which are frequently criticized for failing to pull their weight – and even lambasted as “free-riders,” intent on pillaging European assets and markets. Is this criticism warranted?

In a word: no. The reality is that major Internet companies – most of which are based in the United States – are already contributing billions of dollars to establish and maintain the networks and data centers that are essential to the Internet’s functioning.

In fact, these companies directly invested more than €75 billion ($100 billion) in Internet infrastructure over the last three years, with spending up by about 10% annually over this period. Moreover, they participated in consortia that invested more than €500 million in laying a trans-Pacific submarine fiber optic cable, which has been operational since 2010, and an 8,300-kilometer (5,200-mile) cable from Southeast Asia to Japan that came on-stream last year.

But it is Europe that has received the lion’s share of global investment in Internet infrastructure – €25 billion, or nearly one-third of the total, in the last three years. Google recently announced the construction of a new €600 million data center in the Netherlands, and is already investing heavily in data centers in Hamina, Finland, and St. Ghislain, Belgium. And Facebook has already established its own data center in Luleå, Sweden.