French Regulator Says Interconnect Costs Per Subscriber Are Tens Of Cents Per Month

In many countries there's currently a debate fueled by Internet access providers (IAP) who argue that the ever increasing amount of data flowing through their networks from media streaming platforms will lead to a significant increase in prices for consumers. The way out, as they portray it, is to not only get paid by their subscribers but in addition also by the media streaming platforms. In practice this would mean that Google and Co. would not only have to pay for the Internet access of their data centers but in addition, they would also be required to pay a fee to the thousands and thousands of IAPs around the globe.

Unfortunately, I haven't seen a single of these IAP claims being backup up with concrete data on why monthly user charges are no longer sufficient to improve the local infrastructure in the same way as has been happening for years. Also, there has been no data on how much interconnect charges to other networks at the IAPs border to long distance networks would increase on a per user basis. Thus I was quite thankful when the French Telecoms regulator ARCEP recently published some data on this.

According to this article in the French newspaper Le Monde (Google's translation to English here) ARCEP says that interconnect charges per user are typically in the range of tens of cents per user per month. In other words, compared to the monthly amount users pay for their Internet access, the interconnection charge per user is almost negligible. Also, interconnection charges keep dropping on an annual basis so it's likely that effect will compensate the increasing traffic from streaming platforms.

So the overwhelming part of what users pay per month for their Internet access goes toward paying for the costs of running the local access network up to the interconnect point. This means they pay for the facilities, routers, optical cables to the switching centers and from there for the optical cables to street hubs or the traditional copper cables directly from the switching centers to their homes.

Which of these things become more expensive as data rates increase? The cost for the buildings in which equipment are housed remains the same or even reduces over time due to equipment getting smaller and smaller and more centralized so it doesn't go there. Also it's likely that fiber cables do not have to be replaced due to technology improvements that ensure a continuous increase in the amount of data that can be piped through existing cables. That leaves the routing equipment in central exchanges and in street hubs that have to be continuously upgraded. That's nothing new, however, and has been done in the past, too without the need for increasing prices. Quite the contrary.

One activity that is undeniably costly is laying new fiber in cities to increase data rates to the customer premises. Users who take advantage of this, however, are usually paying a higher monthly fee compared to their previously slower connection. And from what I can tell network operators have become quite cost conscious and only build new fiber access networks if they are reasonably certain they get a return for their investment from the monthly subscriber fee.  In other words, this also can't be a reason behind the claim that increasing data rates will increase prices.

But perhaps I'm missing something that can be backed-up with facts?