We are about to see whether the largest and most powerful telecom in Europe, Deutsche Telekom (DT), can force websites and apps to pay so-called “network fees” when they deliver the movies, sites, and data DT customers request.[1]
That showdown starts today, when Meta starts moving to a different way of delivering WhatsApp, Instagram, and Facebook to DT’s internet customers. Instead of continuing to pay extortionary network fees for a direct connection to DT’s network, Meta will be using a third-party transit provider to connect to DT.
While that might not sound like news, it will be if Deutsche Telekom does what it usually does to online services and networks that refuse to pay DT’s toll – slow down these services by intentionally keeping the “doors” into its network too small.
If DT does this, then millions of DT internet subscribers could have WhatsApp messages that won’t load, Instagram stories that stutter, and Facebook updates that don’t update.
Ultimately, the result of this showdown could determine whether the internet will pivot to a disastrous model where every app and site has to pay every ISP in the world.
Millions of Germans already pay DT to do whatever they want online. Online apps, sites, and services already pay transit providers, hosting providers, and content delivery networks (or build and operate undersea cables, data centers, and CDNs themselves) to deliver their traffic to the doorsteps of DT’s network.
But DT wants more.
Like all of Europe’s biggest telecom companies, DT wants to get paid twice for accepting and delivering the data its customers request – once by its own internet service customers, and again by the websites and services these customers want to use.
Forcing websites to pay their customers’ ISPs would raise costs for every speaker, every business, and ultimately, all internet users; some services could no longer be available in certain countries or on certain ISPs.
This is not hyperbole. In February 2024, Twitch, the video streaming company, exited South Korea, where it was extremely popular, because the network fees it had to pay Korean ISPs were so egregious that offering its service was no longer profitable.
For the past two years, Europe’s biggest telecoms have been pushing ISP-friendly European Commissioners to mandate network fees without success.
Network fees were first proposed by Europe’s largest telecom companies more than 12 years ago and were rejected at the time by Europe’s top telecom regulator BEREC, European governments, the European Commission, and the International Telecommunications Union.
These network fees are a radical departure from how the internet has operated for the past 30 years: Consumers pay their ISP to get access to the entire Internet – not just to the websites that have paid the consumers’ ISPs. Apps and sites pay to get their data to their customers’ ISPs, but they don’t pay additional fees to their customers’ ISPs.
Network fees are not only unnecessary; they are radically harmful. They would reverse decades of successful internet economics, increase the costs for European consumers and businesses, and are unlikely to foster broadband deployment. They also violate Europe’s net neutrality law.
In last year’s Commission consultation on the future of the electronic communications sector and its infrastructure, network fees were thoroughly opposed by everyone except the largest ISPs and their trade associations. Opponents include BEREC, the majority of European member states, members of the European parliament, a wide range of consumer groups, digital rights groups, and industry groups, academics (including me), and guardians of the internet like the Internet Society and the Internet Architecture Board.
Upending industry norms and unbeknownst to the public, Deutsche Telekom has been forcing companies to pay network fees for years. It’s the only German ISP that does this.
The vast majority of ISPs do not receive fees from the companies delivering the data the ISPs’ customers request.
These ISPs pay a transit provider to connect their network to the rest of the internet; in addition, many ISPs exchange data with companies delivering data for the ISPs’ customers without paying or receiving a fee.
That’s the norm in Germany, Europe, and around the world.
That norm makes sense.
People pay their ISP for full, unfettered access to the entire internet. The internet is a network of networks: it consists of many networks, and an ISP runs only one of them. To fulfill its duty to its customers and let them reach any computer on the internet (including the many apps and sites on other networks), an ISP needs to connect to other networks.
An ISP has two basic ways of connecting with other networks to allow its customers to reach the rest of the internet.
An ISP can pay a transit provider. A transit provider transports the ISP’s data to and from the entire internet, which allows the ISP's subscribers to reach all the networks that are part of the internet; it’s an internet service provider for companies.
An ISP’s transit bill works much like billing works for people’s home internet service: an ISP pays for a 1 Gbps or 10 Gbps connection monthly. The more data the ISP’s customers send and receive, the more movies they watch, the more sites they visit, the more the ISP has to pay for its transit connection.
In addition, an ISP can connect with directly specific networks as well as specific larger apps and services, content delivery networks, and hosting providers. That means data from that provider moves directly from the provider’s network into the ISP’s network, and vice versa, instead of reaching the ISP’s network via the ISP’s transit provider.
That’s mutually beneficial: Since data can move directly between the two networks instead of going through a third-party transit provider, apps and services load faster and are more responsive. This makes the ISP’s customers happy. If the ISP’s transit connection goes down, its customers can still access apps and services to which the ISP connects directly, so the ISP’s network is more resilient. And connecting directly with certain providers saves the ISP money, since it doesn’t have to send and receive as much data through its transit provider.
That’s why the vast majority of ISPs worldwide interconnect directly with big providers like Meta, Netflix, YouTube, Cloudflare, Akamai and others for free.
Doing so is in their own interest.
Only the biggest ISPs exploit their market power over tens of millions of subscribers to extract network fees from the companies that deliver the data the ISPs’ subscribers request.
To be clear, these companies don’t want to pay network fees; they are bullied into it.
The ISPs’ strategy is simple: Make sure that unpaid connections into the ISP’s network have lower quality than the connections for which the ISP receives network fees. This forces companies that need a good-quality connection to the ISP’s customers to pay the ISP.
That’s what Deutsche Telekom has been doing.
Apps and sites that pay DT’s network fees (or use a provider that pays these fees) get to enter DT’s network through fast, uncongested connections; they effectively get a “fast lane” into DT’s network.
Apps and sites that refuse to pay DT’s network fees have to enter DT’s network through slow, congested connections.
The effects of DT’s shakedown tactics are already visible.
If DT customers visit a site that enters DT’s network through such a congested connection, the site doesn’t load quickly or doesn’t load at all. On Discord, images don't load, and videos buffer. Online games lag.
When that happens, users of the affected applications often blame the application; after all, other apps and sites work fine. They complain about the app online, use it less, and may even quit it completely.
DT serves almost 40% of German fixed internet customers, and the only way to reach them is through DT. Most providers simply cannot afford to have their apps and sites suck for so many customers, so many end up paying the fee, albeit begrudgingly.
They either pay DT for a direct, uncongested connection,[2] or they use a transit provider, hosting provider, or content delivery network that pays DT and passes the network fees on to them.
Either way, apps and services that pay DT’s network fees work well, the others do not.
In essence, Deutsche Telekom is taking its customers hostage to force the apps and sites to pay a ransom.
Companies that can’t afford to pay or balk at the fees experience severe congestion. That happened, for example, to the German Research Network (“Deutsches Forschungsnetz”) in the middle of the pandemic.
German students, faculty, and staff had to study and work from home, so they used their Deutsche Telekom home internet connection to access university websites and resources on university computers attached to the German Research Network.
All of these requests increased the amount of data that German Research Network delivered to Deutsche Telekom through GRN’s transit provider, congesting that provider’s connections into Deutsche Telekom’s network.
Even though Deutsche Telekom customers had paid Deutsche Telekom for a fast connection to the entire internet, accessing university resources took forever or didn’t work at all.
GRN’s transit provider connected with Deutsche Telekom without either paying the other. Under industry norms, such interconnection partners work together to widen their connections as traffic increases.
But Deutsche Telekom refused to widen this unpaid connection or connect directly with the German Research Network without fees until the German Research Network wrote DT a check for a direct, uncongested connection.
That’s just one of many examples. Online forums are full of complaints by Deutsche Telekom customers that sites, apps, or services they want to use are not loading or loading very slowly.
Deutsche Telekom is the only German ISP using these bullying tactics. No other German ISP is paid network fees, and no other German ISP lets unpaid connections into its network congest to force companies into paying these fees.
The upcoming showdown
For many years, Meta quietly paid Deutsche Telekom in order to escape this kind of hostage taking and ensure that WhatsApp, Instagram, and other Meta services worked well for Deutsche Telekom subscribers.
In late 2020, Meta decided that the ransom had gotten too high and that it wasn’t going to pay any more. It terminated the contract, effective March 2021, and stopped paying.
However, Meta and Deutsche Telekom have continued to use the direct connections between their networks to let Deutsche Telekom subscribers use Meta services.
Deutsche Telekom said the use of the direct connection was subject to the same fees Meta had owed before.
Meta said its use of the direct connections after the termination of the contract was governed by the industry norm, where an ISP isn’t paid for accepting the data its customers request.
When Meta refused to pay, Deutsche Telekom sued Meta in court.
In May 2024, the court ruled for Deutsche Telekom.
Relying on principles of German contract law, the court held that when Meta continued to use the direct connections after terminating the original contact, it entered into a new contract that required it to pay Deutsche Telekom. In other words, Meta’s actions – using the direct connections – contradicted its words that it was terminating the contract. And under German contract law, Meta’s actions trumped its words.
According to the decision, the only way for Meta to terminate the contract is to align its actions with its words and end its direct connection with Deutsche Telekom.
That’s what Meta just announced. Starting today, Meta plans to send any data Deutsche Telekom subscribers request from Meta via a third-party transit provider.
However, Deutsche Telekom’s subscribers use lots of WhatsApp, Instagram and Facebook; they are among the most popular apps in Germany. That means Meta’s transit provider will be delivering substantially more data to Deutsche Telekom than it did before.
So the looming question is:
Will Deutsche Telekom expand its connections with that transit provider so they are large enough for all of the Meta data that Deutsche Telekom subscribers request? Or will it allow those connections to become congested and slow as a way to punish Meta and force it to pay Deutsche Telekom again?
The other big question:
If Deutsche Telekom does let its connection with that transit provider congest, as it has done many times before, will Germany’s telecom regulator, the Bundesnetzagentur, recognize that these tactics violate Europe’s net neutrality law and stop Deutsche Telekom’s abusive and well-documented violations?
The looming showdown is not just a battle between Meta and Deutsche Telekom – two large companies that can fight for themselves.
It’s about all apps and sites, and Germans’ ability to use the apps and services of their choice.
Deutsche Telekom’s bullying tactics affect every online site, app, and service. They either pay Deutsche Telekom or suffer bad performance.
If your website or service uses a hosting provider or content delivery network that isn’t paying Deutsche Telekom for a direct, uncongested connection, your site or service will load slowly for Deutsche Telekom subscribers in Germany, and you may not even know it.
If you buy internet access from Deutsche Telekom, you pay Deutsche Telekom for a fast connection to the internet. But whether the apps and services you want to use actually work well, completely depends on whether they have paid Deutsche Telekom’s ransom.
That violates Europe’s net neutrality law. The law protects people’s right to use the applications of their choice; that right is not limited to apps that have paid people’s ISP.
All of this has been happening for a while. This is just going to be the first time most people hear about it.
Soon we will see whether Deutsche Telekom slows down Meta for millions of Germans and, if it does, whether the German regulator has the courage to step in and stop the bully.
Barbara van Schewick is one of the world's leading experts on net neutrality, a professor at Stanford Law School, and the director of Stanford Law School's center for Internet and Society.
Her salary, research support, and travel* are funded through the general budget of Stanford Law School and are independent of the budget and funding of the Center for Internet and Society. She has received no direct or indirect corporate funding for her work with the Center for Internet and Society or Stanford Law School. *Unless covered by event organizers.
Read more:
Explainer analyzing the network fee proposals (download PDF; read online in a Google doc).
[1] Parts of this post draw on my earlier writing on network fees and net neutrality.
[2] Deutsche Telekom’s network fees can be hard to spot. That’s because Deutsche Telekom hides its network fees in transit agreements: DT forces companies that need an uncongested connection into DT’s network to buy DT’s transit service, even if the only service the company wants, needs, and uses from DT is accepting the data DT’s customers requested and delivering it to these customers. By contrast, a transit provider connects its transit customers to the entire internet; it’s an internet service provider for larger companies.
Most companies that pay DT for a direct connection don’t need DT to connect them to the entire internet; they already have a transit provider or their own global network that let them reach the entire internet. The only thing these companies need is an uncongested connection into DT’s network so their app or service works well for DT’s customers.