• Telecoms

    Why national telecoms law is no longer relevant and no longer works

    Is there a single reason why we need national telecoms law in the digital age in the European Union? I am struggling to think of one. I'm not saying a universal telecoms utopia is about to descend on us. I am simply putting it out there, that there's no u [read more]
    byRyan Heath | 16/Feb/20157 min read
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    Is there a single reason why we need national telecoms law in the digital age in the European Union? I am struggling to think of one. I’m not saying a universal telecoms utopia is about to descend on us. I am simply putting it out there, that there’s no use for national law in this area anymore.

    I can already here the “buts” screaming at me through the interweb. Remember that the starting assumption of most individuals and like-minded groups is that they are unique, or have unique needs. This applies across all forms of thinking and human activity. Thinking you or your country is unique is about the least unique thing you can do.

    From a consumer perspective, we need to ask why the most borderless service and content category – the online world – is the one with the most national regulation.

    Why does a consumer in Austria need more rights to change phone contracts than a citizen in Slovenia? Why does a Belgian need 141 times more protection from 4G radiation than a citizen in France? .

    In a connected and data-powered world we can see relatively quickly and easily what works and what doesn’t. Policy is no exception, and it’s quite clear that 28 different approaches to telecoms don’t work.

    Achieving uniformity would come at too high a political cost; but the cost of pretending there is a policy benefit to every European country doing their own thing is higher.

    Jealously guarding the pet ideas and projects of whichever mid-level policy makers have cornered the geeky digital fields for themselves in a given country is not the way to make good policy.

    Think about the example of the so-called “Universal Service Obligation” which imposes on incumbent telecoms companies certain levels of service guarantee. In the countries that want it. To the extent they feel like it. Or felt like it when they last discussed it. A decade ago. Seriously?

    Here’s my question to people who think it should exist: what’s universal about it, if every country gets to decide whether to have it and what the parameters are?

    Aside from the fact that it’s hard for a government to keep up to date with what people want and need in terms of internet access, it’s all just so pointless when a Universal Service Obligation is neither universal nor obligatory.

    From a rural broadband roll-out perspective, let’s look beyond the failed effort to use European Investment Bank to fill rural gaps, as the Connecting Europe Facility proposed.

    [Tweet “We can abandon failed national practices and laws without impinging on national sovereignty…”]

    …simply by spreading the best policy models.

    What is there to gain from following the Italian model, where virtually no-one has fast broadband outside of cities? Nothing.

    What is there to gain from the Swedish model, where virtually everyone does?A great deal.

    Letting countries choose to fail out of deference to traditions of national policy failure is ridiculous. This has nothing to do with threatening a country’s identity or way of life (unless you count poverty and isolation as a way of life) and everything to do with common sense.

    From a business perspective let’s look at mobile roaming charges. In popular debate we hear about holiday-makers getting shock bills or being forced to turn off their devices.

    In reality the people and economic activity affected most by roaming charges are businesses and business travellers. Job creation, exports, and start-ups are not helped by roaming charges.

    These are arbitrary charges introduced in the 1990s (and not from the get-go: the original system was just a 33% mark-up on your domestic bill when you travelled), based on non-existent extra costs.

    It costs supermarket chains more deliver goods to stores without truck parking spaces than it does for telecoms operators to connect you while abroad. And you don’t see that supermarkets charging a 2000% mark-up in response to their traffic problem. Why should telcos?

    Stupid systems like this hurt the people who do most to grow our economy, and they hurt blameless victims like people who live in border zones. And that’s before considering the anger and confusion imposed on ordinary retail customers.

    There is no justification for them on market or political terms. They are simply logically inconsistent to the over-riding principle of the single market. No national law can possibly trump that set of arguments. And yet we hear endlessly about how hard abolishing roaming fees will be for telcos in holiday destinations like Portugal and France.

    Yes, how terrible for those telcos having to cope with people paying them to send their holiday photos home in August. Next time you see a telco CEO: remember he is like a starving child – only he suffers more – because the fat from his roaming cash cow is at risk.

    Then there’s the mother of all stakeholder issues: net neutrality. We cannot seem to agree on a working definition of the concept to conduct a public debate. Given that, is 28 parallel national debates about the same universal network that we all depend on really the way to achieve public good? The only ways forward are European and global debates.

    Then there’s the mother of all geek issues: spectrum. If you look at chart of how spectrum is allocated in Europe it looks like a university student threw up on a sheet of paper after a night out drinking cheap spirits and pizza. It’s so mangled and messed up that it’s clear no national set of decision-makers could possibly untwist it all.

    It’s rare to even get enough brains in a room to make sense of it, let alone fix it. The relevance to the issue of national vs EU law is that there’s a difference between saying every country has the right to reserve certain amounts of spectrum for military use (fair enough) and other distortions.

    There is no reason to leave TV stations with existing spectrum just because they existed before mobile companies did.

    There is no sense in greedy national treasuries conducting blood-sucking auctions – because all they do is delay new service roll-out and the extra tax receipts that come with it.

    There is no reason for spectrum to be allocated to pagers (remember them on the doctor’s waist in the 1980s) and taxi radio systems (what’s an app, guys?).

    Again, let countries reserve spectrum for the military, and then let a common European system apply to the rest. If we don’t, you can look forward to your mobile phone dropping out even more often sometime in the mid-future.

    Even when it is not legally or political possibly to apply European or global solutions, it is still fundamentally necessary to have European debates. Because if there is one thing we have learnt from the history of telecoms – from undersea cables to internet to the GSM standard to the rise of Vodafone to roaming price caps – it is that cross-border action has the best impacts.

     

     

    photo credits: János Balázs
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  • Digital Single Market

    Why competition policy can’t fix most digital market problems

    Dozens of players keep running to EU competition authorities amid current wars around tech and telecoms policy. Anxious decision-makers are also weighing in by calling for more antitrust action. Yet the idea that competition law is a panacea for every mar [read more]
    byRyan Heath | 16/Dec/20145 min read
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    Dozens of players keep running to EU competition authorities amid current wars around tech and telecoms policy. Anxious decision-makers are also weighing in by calling for more antitrust action. Yet the idea that competition law is a panacea for every market problem is misplaced. In fact, it could delay Europe’s innovation dividend.

    The fundamental rule in any market economy is that market forces, rather than public interventions, should be the predominate factor. If you have an idea or a problem – you try to address it first on market terms.

    If you think the market has changed so much that there is no real level playing field, then you lobby to have the rules changed. Only in the case that all these efforts fail, or in the case that the rules were appropriate but broken in ways that significantly harm consumers and competitors, do you then think about getting competition law involved.

    There are few instances in the current wars around tech and telecoms policy handling where these tests are met. Yet dozens of players keep running to the European Commission competition regulators to fix their problems.

    Why?

    Competitors who are failing in the market find it financially rational to roll the dice with regulators in the hope they catch a break.

    “Five millions euros on a fake grassroots campaign and a bunch of mega-bucks lawyers – no worries! We could win a billion!” On the other side of the coin, companies under investigation or threat of investigation find it handy to string the process out.  “Why settle now?  Sure that would be simpler but if we string it out we could squeeze another billion out of our business model!” Ker-ching! [Tweet “EU and national regulators risk being turned into service-providers to warring market players”]

    In this world-view if only the EU was fairer, tougher, softer, saner, quicker, more inclusive, less obsessed with consumers … pick your adjective, then all their problems would go away.

    Let telcos merge!  Take on Google! Show the Americans we are not pushovers! Save consumers! All these actors want the EU to be either digital-surgeon-for-hire or digital-death-squad-for-hire. They are wrong to want it, and deluded to think the EU can deliver it, even in the few cases where the current treaty makes it legally possible.

    Those problems on their own might be containable. But another factor risks pushing this growing snowball out of control: the market players often misunderstand their own long-term interest.

    Let me give you some examples.

    1. Telecoms companies that insist on in-country mergers. These mergers are seen as a solution to their failing business models (shrinking margins on non-data services, and cross-subsidising rip-offs like roaming). Such companies run to the EU because their national regulators do not give the answers they want.

    In trying to squeeze the Commission before there is a real EU telecoms single market they risk throwing away the last shreds of trust they have with their customers (they are already the most complained-about sector). Recent in-country mergers haven’t improved networks (because you need external finance not medium-term merger efficiencies for that) but they have increased consumer prices.

    More broken promises like this will lead to things like the most restrictive type of net neutrality laws and willingness by authorities to let these telcos go bankrupt.

    Remember that the privately-owned companies can go bust and their cables and towers will simply be sold onto to someone less greedy. The government-owned companies are the biggest danger. They want mergers because they are too afraid to do what they really need to do: restructure, including making tens of thousands of unnecessary staff redundant.

    That is politically difficult today – so it’s much easier to blame EU regulation and run to EU competition enforcers to get them out of the real business choice they face. These former government monopolies risk bringing the whole house down, and it’s really got nothing to do with competition law.

    2. Companies that lined up to stall a Google search settlement (including Google). There’s a whole question of whether this investigation was ideal, what’s less ideal is the unseemly harangue around it. I’ve lost count of the number of fake organisations lobbying for certain outcomes. Here’s a tip: any group with an adjective in the title is probably fake. Interests should lobby as themselves or via a neutrally-titled industry association, not via some imaginary group a citizen can’t themselves join.

    This endless jockeying over Google is virtually identical to the games around the Commission’s 2012 data protection proposals. And all that won the antagonists was a half-cooked court ruling that posed more new questions than it gave answers.

    The other analogy that comes to mind is the copyright policy gridlock in Europe. 14 years without a revision of the law, and Europeans are forced to pirate content to make up for the parallel trench-warfare regulators and stakeholders have built for themselves.

    The main companies in all these games think their choice is short-term rational. Maybe. But it isn’t long-term rational because it’s one big distraction from the task of innovation. And it’s downright crazy for European society, because it delays Europe’s innovation dividend: jobs, and keeps European competitors in the thrall of the stupid meta-narrative that everything revolves around DG Competition.

    A line needs to be drawn under this nonsense. Is that giving into new digital monopolies? No.

    Google is not the monopoly when it comes to the internet – the US government is. Which is why the European Union has long wished to reform internet governance so that the monopoly is broken, and a fair level playing field can exist. Now that the US Government itself agrees to that, the task is to ensure it happens. That is the first big picture. Lining regulatory guns up against one successful player in a sub-market, a player which by definition is not a monopoly, is a fool’s errand.

    The second big picture is that of big data. It’s not about the competitive tactics of Google or Amazon or Facebook. The big picture is about how data in a new means of production and how the manipulation of it is going to alter what it means to be human.

    Dealing with that question is way above DG Competition’s pay grade, but it is the question that should be consuming all of us – the companies included.

    And here’s the ultimate proof of why competition law isn’t going to hit the nail on the head: the only thing the data companies would be scared of is if they were forced to register and publish their algorithms.

    That may be a bad idea for lots of reasons, but it is the only thing that would truly allow competition authorities to know what is going on and to fix it. DG Competition can’t force that and the EU is never going to be legally allowed to propose it.

    So it’s time to worry less about sideshows dressed up as the main game.

    It’s time to realize that competition law is just one instrument of one minority factor in the wider digital revolution.

    If we don’t, we’re all shooting ourselves in the foot.

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