The Caribbean is a microcosm of Big Tech’s digital colonialism. Small and medium-sized emerging countries are profitable to exploit

As their collective market cap approaches $15 trillion and their traffic consumes some 80 percent of global broadband bandwidth, Big Tech–Alphabet, Meta, Apple, Amazon, Microsoft, Netflix, TikTok and others—take the policy focus. These companies have revolutionized economies, entertainment, and social engagement using business models predicated on forced discount, if not free, access to local networks, spectrum, and content. Such political control and economic exploitation amounts to digital colonialism.

There is an estimated $2 trillion global shortfall in broadband network investment, and one-third of the world’s population remains offline for lack of income, according to United Nations and the International Telecommunications Union. Adding another 2-3 billion internet users is a revenue opportunity, however Big Tech prefers that someone else foots the bill of building networks, which Big Tech expects to use for free or below cost. In a normal competitive economy, access to resources would be negotiated, usually offered for a fee. However, Big Tech can use its market power to force free and discounted delivery of its data. This is the definition of monopoly power, the ability to force a price which would not prevail in a competitive or regulated market.

Small and medium-sized emerging nations are particularly disadvantaged to engage with Big Tech. In many cases, their gross domestic product is less than the annual revenue of one of these firms. All the same, policymakers from these countries are responsible for taxation, economic development, privacy, consumer protection, competition, and so on. Policymakers are concerned about Big Tech’s footprint: how they collect and use data to generate ads, how they free ride on local networks and spectrum, whether or not they pay local taxes and fees; and how to enforce competition and consumer protection rules.

Big Tech claims that their services are the reason why people subscribe to broadband and that without their services, no one would subscribe. As Strand Consult and others have documented, people subscribe to broadband for many services, not just for Big Tech’s. And yet, Big Tech services consume 80 percent of network bandwidth (some 25% alone is video advertising), leaving just 20 percent for essential services for work, school, healthcare, public safety. The distribution of network bandwidth is hardly proportional, and indeed, many services like Netflix adapt to consume available bandwidth.

Strand Consult understands these challenges and inequalities, particularly as established domestic telecom and media industries are highly regulated. Strand Consult launched its Global Project on Broadband Cost Recovery to study these problems and propose solutions. It has studied dozens of countries and hundreds of operators, particularly in emerging countries. While deregulation is proffered to the problem as one solution and is welcome for investors, deregulation can destabilize nations which are dependent on local industry for essential tax and regulatory revenue.

The Caribbean exhibits many of these challenges with Big Tech. The Caribbean is like Europe, Latin American and Africa – a region with diverse, sovereign states. The Caribbean has some 45 million people and roughly $135 billion in GDP, equal to Meta’s annual turnover and less than half of Alphabet’s (Google) annual turnover. Caribbean nations have distinct economies, languages, histories, and cultures, and its geopolitical importance is felt at the UN and other global fora for its independent votes and voices. Indeed, the UN has a special designation called the Small Island Developing States (SIDS), a distinct group of 39 States and 18 Associate Members of UN regional commissions that face unique social, economic and environmental vulnerabilities. SIDS can be found in the Caribbean, the Pacific, and the Atlantic, Indian Ocean and the South China Sea (AIS).

Strand Consult’s study of publicly available information shows that Big Tech earns an estimated $30 per month per Caribbean user, a tidy sum when considering that its costs to deliver to the region are limited. At the same time, a typical Caribbean mobile subscription is but $10 per month. Telecom operators are challenged to break even on this amount which must cover investing in new capacity, replacing equipment, repair from natural disasters as so on. Moreover, the cost of capital can top 15%.  Here are some cold facts when it comes to Big Tech in the Caribbean.

1. Telecom operators must establish business in the relevant country and pay local tax. They build and rent offices and establish operating locations. Big Tech can earn revenue without having to register locally or pay local tax.
2. In addition to business registration and incorporation, telecom operators must obtain operating and spectrum licences to do business. These require significant upfront and annual fees. Not only does Big Tech have no such license requirements, it pays no fees for its use of local spectrum.
3. The employees of telecom operators and local media companies are based in the local country; telecom operators and local media companies pay their salaries, employee taxes and benefits. Big Tech has almost no employees in the region; its employees sit in faraway locations and can earn revenue without spending a cent in the Caribbean.
4. Media companies invest in local artists and content; they generate revenue by selling local content and advertising, and they pay local tax. Big Tech generally doesn’t invest in local content, at least in the Caribbean. The money Big Tech makes from selling ads and services is spirted away from the Caribbean without contributing to the local content industry.
5. Big Tech earns about $30 per user per month in the Caribbean; this is three times the price of a mobile subscription. And yet telecom operators are responsible to cover the costs of network deployment. About one-third of the Caribbean’s people lack internet access, some 12-15 million people. The cost to connect them with fixed and wireless networks is $10-13 billion, about as much as Big Tech earns in the region in a year. Big Tech stands to gain significantly as new users come online and as user migrate to more advanced networks (4G to 5G). However, Big Tech firms have rejected opportunities to negotiate their use of local broadband networks, even though they would still profit. Their position is that have no obligation to negotiate or pay for network access, even though they expect their data to be delivered for free at ever increasing volumes. 
6. Caribbean telecom operators and local media companies are further squeezed because traditional sources of legal, regulated revenue are disappearing. Revenue from traditional and mobile voice and local advertising is flat or declining. The new revenue from a 5G or fiber subscription from the same customer does not necessarily replace the prior revenue on the legacy network. Meanwhile Big Tech offers unregulated substitute services over broadband networks. People use WhatsApp instead of text message and check social media instead of the news. As the antitrust scraping cases show, Google exposes bits of content on its search page without paying fees or royalties to the content/media creator, and thus obviating the need of the user to visit the originating content site, where the local owner could earn revenue from the visit. Mobile operators must give over their networks to competitive services and ads for free.
7. The Caribbean telecom industry is not alone in being disrupted by Big Tech which operate with favorable and unregulated conditions. Similar challenges beset the Caribbean in news, broadcasting, music, publishing and other media industries.

Rather than reducing disparity, regulation in the Caribbean is, unintentionally and perversely, promoting digital colonialism. Caribbean policy does not promote an playing field between local and global players. Rather, it unwittingly increases economic and political inequality.

The Caribbean is a microcosm of Big Tech’s digital colonialism and illustrates a case study in free riding. Like the colonizers of old, Big Tech claims it is doing good while it uses local resources for free and takes its revenue elsewhere.

Caribbean governments and policymakers should take action to secure the digital future of the region. Check out Strand Consult’s Global Project on Broadband Cost Recovery to understand the problem at local and global levels and evaluate the pros and cons of different solutions.