Posted on 23/Sep/2015
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We should not allow Europe to go backwards, the rules which gave highly performing results on copper, which allowed for outstanding innovation such as the creation of the triple-play offer should be equally enforced in the new fibre world.

Telecoms. Infrastructure. Fibre, FTTC, FTTH. 4G, 5G. Backhaul. They sound very boring, don’t they?

And yet, how we deal with these words today determines our future. Why? Internet connections via telecoms networks are some of the most important pieces of the puzzle of a high-speed connected world. E-services, connected cars, smart cities, Industry 4.0, unlimited speeds, innovation – our world going online – depend on high quality and high speed infrastructure.

Just like needing high quality chocolate to bake an irresistible chocolate cake – and for someone living in Belgium I know that choosing high quality chocolate can also be affordable – we need high speed networks to deliver high speed Internet connections at an affordable price to everyone in Europe.

If we want to tap into the digital revolution, we have to deal with its essential enablers, the networks, wired and wireless

 

Shaping the right foundations for a world of possibilities

Building the telecom infrastructure does not happen in the blink of an eye, to the contrary, we are talking about long term investments, at least for 20 years.

So let me give you several reasons why it is relevant to talk about this today: many people use more and more video streaming, public services are now increasingly based on digital tools. According to the OECD Digital Outlook 2015, though the share remains dispersed across countries, 64% of individuals in the OECD area relied on e-government services in 2013. Smart living is also essential to improve energy consumption or transport systems, people located in remote areas can now benefit from online training or education (1).

Some usage such as telemedicine can also dramatically change the future, provided the network connection is of the adequate quality. The same report from the OECD quotes estimates, which indicate that by 2017, mHealth applications could potentially save €99 billion in health care costs in the European Union.

 

And tomorrow what will be the new possibilities?

What we can take for granted is that the need for additional bandwidth will go increasingly and this is the challenge we are facing today. How to build the networks which will answer the needs of this new digitalised society?

The European Commission is now about to review the rules for these electronic communications services. This is the time when everybody should express their opinions about what they want for the future and how they could contribute to it.

I hear you say: “Here we are! Another telecoms lobbyist asking policy makers to allow them to make more profit.”

Well… That’s partly true but the interesting part is that it is possible to have a win-win solution for all. It is very well possible for end users to get affordable, high speed and innovative services and for the telecoms industry to have fair returns.

Equally it is possible to have affordable prices and good value money for end-users whilst having network investments in high capacity next generation networks. It is vibrant competition that delivers a win-win solution for end-users and the telecoms sector alike. And vibrant competition in telecoms crucially depends on effective regulation.

The role of the regulatory framework for electronic communication services is to encourage competition and guarantee basic user rights in order for European consumers and businesses to obtain quality services at affordable prices.

 

Rebuilding the virtuous circle of competition

Regulation should thus re-focus on competition as the triggering part of a virtuous circle: it pushes companies to be more innovative and efficient and offer services at competitive prices, which generates user demand. Demand in turn drives more investment.

However, the most best way to stimulate competition is through access regulation, meaning the ability of challenger operators to pay for access to the infrastructure of another operator that cannot be duplicated in order to offer services.

 

More players simply invest more… if enduring bottlenecks are tackled!

Alternative operators are investing significantly in networks and effective access regulation is the key enabler of their network investments. .

And the good news is – as a recent study by Analysys Mason shows – that pro-competitive regulation is a win-win for end-users and the telecoms industry. Vibrant broadband competition has led to lower, affordable prices for end-users and at the same time to higher revenues for the telecoms industry as a whole.

The revenues of the telecoms sector grew despite falling prices because affordability led to much higher broadband take-up by end-users. So there is no trade-off between competition and investments, nor between investments and affordable prices.

Obviously, for fixed infrastructures, it is sometimes not economically feasible to roll-out 3 or 4 parallel networks. The difference between choice and affordable prices for the end-users and no choice and high prices will depend on the degree of competition in the market, the possibility for all operators to invest and have access to the non-replicable parts of the networks. The last mile of the network is an enduring bottleneck and needs to be regulated.

The challenge for the review of the framework can be described as such: whilst there are lots of concerns voiced on the raise of new monopolies such as big US companies, the old monopolies are very much on the rise: according to the European Commission’s digital scoreboard 2015, incumbent operators have a 69% market share in VDSL which is currently the leading NGA technology in Europe.

 

Rules in a fibre world

We should not allow Europe to go backwards, the rules which gave highly performing results on copper, which allowed for outstanding innovation such as the creation of the triple-play offer should be equally enforced in the new fibre world.

That is also valid for rural areas where public money will be necessary to complement private investments: when there is no business case to build parallel infrastructures, every operator should have access to the monopolistic infrastructure as injecting competition is essential for affordability and innovation. There’s clearly no point in building a network if prices are so high that people can’t afford the services.

ECTA has just released a study by Analysys Mason on the rules to build our future digital highways with the aim to provide policy-makers with food for thought on what is, in our view, the best way to create a fully connected European society and economy.

Whether or not we decide to follow the path towards a vibrant competitive broadband market will make a huge difference from an end-user’s perspective and as a consequence on driving the necessary investments matching these ambitions.

 

(1) The OECD Digital Outlook 2015 indicates that open online courses are becoming more popular with 7.8% of Internet users in the EU who followed an online course compared with 4.7% in 2007.
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