• Telecoms

    The competition vs investments debate jeopardises EU leadership opportunities in 5G

    EU leadership on 5G will depend on the ability of policy makers to think out-of-the-box, and beyond old debates. Instead, they should keep focusing on universal, technology neutral and future proof principles. On 26th January, the industry and research c [read more]
    byFederico Poggi | 14/Feb/20173 min read
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    EU leadership on 5G will depend on the ability of policy makers to think out-of-the-box, and beyond old debates. Instead, they should keep focusing on universal, technology neutral and future proof principles.

    On 26th January, the industry and research committee (ITRE) of the European Parliament organised the first hearing on the future of electronic communications following the legislative proposals tabled by the European Commission in September last year.

    Listening to the discussion it emerged clearly that the debate is increasingly heating up and that, at least when it comes to the future of pro-competitive access measures, two clear opposite camps are shaping up: on one side, consumers, alternative telecom operators and regulators (BEREC) that ask to maintain the pro-competitive framework that guaranteed high  broadband performances and low prices in most EU countries for the last 15 years; and, on the other side, dominant telcos (ETNO and GSMA) and some financial institutions such as HSBC loudly advocating for a deregulatory agenda that would grant higher profits to few selected players and for their investors.

    Connected to this policy fight there is a much more strategic ongoing battle, the one on the future of 5G and on the way to ensure EU leadership in the development of this emerging technology. How 5G will finally develop and what will actually deliver is not consensual yet.

    A recent study recently published by the European Parliament precisely on this topic raises several concerns and affirms that established telcos are trying to steer current and future 5G policies towards a precise scenario, i.e. 5G as the new generation of mobile communications based on exclusive spectrum licenses (just like 3G and 4G). In this model/scenario only few players share the consumer market for faster and more reliable mobile communications.

    But 5G could mean much more than this. The goal that Europe could set for itself is that 5G will finally enable full convergence between fixed and mobile data communication services. On top of this seamless connectivity any provider should be able to create and offer new services, that is the emergence of totally new and innovative platform.

    In order to do this, it is essential that policy makers think out-of-the-box in an open manner and that, with this view, they refrain from defining rules today that could set development of 5G on an old path. Policy makers should keep focused on universal, technology neutral and future proof principles.

    In this respect competition has played in the past and will play in the future as enabler of innovation and of investments. A pro-competitive framework in terms of access to spectrum resources combined with well-studied regime for spectrum sharing where possible will be crucial to give to Europe its much desired leadership in 5G.

     

    Picture credit: Andrew J. Russell

     

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  • Telecoms

    Is Donald Trump (at last) waking up to the reality of digital markets?

    Donald Trump’s willingness to change his stance against the proposed AT&T-Time Warner merger is a sign of realism. US President should take a clear position in favor of the country's digital industry. This is the only possible approach if the US is [read more]
    byAndrea Giuricin | 27/Jan/20176 min read
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    Donald Trump’s willingness to change his stance against the proposed AT&T-Time Warner merger is a sign of realism. US President should take a clear position in favor of the country’s digital industry. This is the only possible approach if the US is to maintain its leadership in the digital market.

    President Trump demonstrated a welcome realism towards the economy last week, declaring that he had not yet “seen any of the facts” regarding the risk of monopoly associated with the merger between AT&T and Time Warner.

    The new US President put the US Telco operator’s offer for the TV market leader under the spotlight in October during a campaign speech in which he warned about the risk to competition linked with creating a group that was too big.

    While this type of risk is a significant factor to consider in a liberal economy such as the US, it is important to understand what “too big” actually means in the telecoms and digital market.

    If we look at the new digital market, which includes huge internet groups (Google), logistics groups (Amazon), content producers (Netflix) as well as traditional telcos and TV operators, it is easy to see that the definition of “too big” has dramatically changed.

    Today we must understand that competition is not confined to a single country, but that we have a real global digital market.

    When AT&T bought DirecTV it was clear that the Americas was being treated as a single area, but it is equally easy to understand that an OTT such as Netflix aims to reach a global market.

    The latest financial results of Netflix underlines this, showing that the non-US markets will soon form the largest part of its revenues.

    The competition in the digital market is not just vertical (Google enters several markets), but it is more and more horizontal in terms of geography. There is a new challenge, clearly recognized and outlined by President Trump: the rise of Chinese companies.

    The two leading countries in terms of the number of mobile connections are China and India, with over 1 billion subscribers each. Last week, Chinese President Xi Jinping advocated for an open economy and the end of protectionism at the World Economic Forum. It was a nice speech, but in reality Chinese competition is difficult to fight given the many barriers to entry in its market.

    The big players from China are targeting digital markets globally with companies such as Alibaba or WeChat operating in a number of markets, not just in Asia but worldwide.  It is becoming clear that operators such as AT&T in fact risk becoming too small to compete on this global stage..

    So, would the merger between AT&T and Time Warner create too large a player?

    AT&T realized several years ago that it was impossible to compete in a digital market without content. The decision to buy Time Warner following DirecTV is the right strategy to ensure continued competitiveness in a global world, especially when considering the expanding Chinese companies.

    President Trump’s outlook on the economy is clear and it should lead to him taking a position in favor of US operators. This is the only possible approach if the US is to maintain its leadership in the digital market together with the high value-added jobs associated with it.

    To make America great again, the US needs realism from its President on this AT&T and Time Warner deal.

     

    Picture credits: Jack Skipworth
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  • Telecoms

    What’s still missing from the EU broadband plans

    Today, across Europe, we can find widespread consensus on the need to invest in high speed networks. However, there are some vital elements missing from the discussion: characterization of the technologies that will allow for such deployment, and ways t [read more]
    byMassimiliano Salini | 18/Jul/20163 min read
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    Today, across Europe, we can find widespread consensus on the need to invest in high speed networks. However, there are some vital elements missing from the discussion: characterization of the technologies that will allow for such deployment, and ways to achieve this.

    According to the World Economic Forum, the Internet-based business activity will reach 4.2 trillion dollars in the G-20 countries by 2016.

    The digital economy is growing faster (about 10% per year) compared to the economy as a whole, while in emerging markets it is growing at a rate of 12-25 % per year, with significant results in social and political terms, as well as economic impact.

    The digital challenge is also central for the European Union countries to stimulate inclusive and sustainable economic growth.

    The potential of the digital economy, the European single market, the Internet of things and the convergence between broadband and TV, can only be achieved if there is adequate digital infrastructure enabling speed in excess of 30 Mbps (Megabits per second).

    Next generation access networks are a general-purpose technology with the potential to trigger productivity gains on a massive scale.

    These gains might take years to accrue, because new applications and new organizational and production designs that use Next generation access networks need time to be developed.

    Nevertheless, we consider wide Next generation access infrastructure roll-out to be welfare enhancing and that it should therefore be an objective of the European Union. This is consistent with the view taken by the European Commission.

    The manner in which the transition to this next generation infrastructure is managed and encouraged will be crucial. Optical fiber is for sure a response to the need of durable, symmetric, reliable and easy to maintain technology.

    Today, across Europe, we can find a widespread consensus on the need to invest in ‘reliable, trustworthy, high speed and affordable networks and services’: the Digital Single Market Strategy and Juncker Plan are a powerful illustration of this consensus.

    However, there are some vital elements missing from the discussion: characterization of the technologies that will allow for such deployment, and ways to achieve this – all the more important at this point of time as the EU is building tomorrow’s infrastructure.

    More than one year after the Junker Plan entered into force, the projects on digital infrastructure are below the expectations. To promote investments the EC shall drive the innovation through a clear framework and better coordinating member states’ initiatives.

    Fibre has a number of benefits which other solutions cannot match. Apart from speed, we need to take the quality and durability of the network components and homogeneity of the network into account.

    Here, fibre outperforms everything else. The network should remain in place for decades and support several consecutive generations of active equipment and services.

    Fibre is the most future-proof option and progress in technologies such as bend-immunity and data compression can increase its active life even further.

    According to the Digital Agenda of the EU Commission, Europe needs competitively priced fast and ultra fast Internet access for all.

    In this regard, the EU is to establish next generation access networks. The Commission intends to use European funds in order to finance investment in broadband but at the same time shall encourage and coordinate MS ‘efforts and private initiatives.

    If Europe wants to benefit of all the advantages offered by the digital revolution, a reliable, trustworthy, high speed and affordable network is at the basis of the digital single market.

     

    Picture credits: Abby
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  • Telecoms

    Dominique Leroy: Let telecoms operators speak with one voice in Europe

    The way the telecoms industry is represented in Europe is still too weak and fragmented, says Proximus CEO Dominique Leroy in a conversation with The Digital Post on the sidelines of the iMinds annual conference. Her main suggestion for the revision of th [read more]
    byThe Digital Post | 27/May/20166 min read
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    The way the telecoms industry is represented in Europe is still too weak and fragmented, says Proximus CEO Dominique Leroy in a conversation with The Digital Post on the sidelines of the iMinds annual conference. Her main suggestion for the revision of the telecom framework: more regulatory focus on services than technology.

    The Digital Post: Let’s start from Internet of Things. Proximus is the first operator in Belgium, and one of the first in Europe, that launched a network for Internet of Things. What is it about?

    Dominique Leroy: Historically, telecoms were always about connecting people. More and more in the future, they will also play a key role in connecting things. Against this background, what we did is not so much building a simple network, but setting up a whole end-to-end ecosystem to enable the Internet of Things. We are providing enterprises, consumers as well as developers an end-to-end system equipped with sensors and based on LoRa networks, a long-range and low-power type of networks that connects sensors without SIM cards.

    The purpose is to get small packets of data from the sensors through the LoRa networks and store them in our data centers on a platform called MyThings, where we already provide data analytics. The idea is then to open the platform to developers so that they can develop new applications. There are certain domains where we would like to go all the way up to creating applications, mainly in the mobility field, where we think that we can really bring an added value through Internet of Things.

    So as you see, the Internet of Things opens up a whole new ecosystem. It is more than a utility provided by telcos. We want to offer solutions, partnerships, we are opening up to other players and therefore we are creating innovation. We are also one of the first companies in the sector moving in this direction.

    TDP: Privacy and security are two big challenges for the IoT. What is your view?iMinds_0

    DL: That’s probably where telco operators have a real added value considering their knowhow: We already provide end-to-end security over our infrastructures, from your phone to the applications you use, all the way to our datacentres. This expertise is very important for tomorrow’s connectivity in cars, home automation and health. LoRa networks come already with a triple encryption key. They secure the sensor identification, the payload and the network. In general, when it comes to using certification, identification and authorization technologies I believe that is where we provide a lot of added value.

    TDP: How do you see telecoms operators capitalizing on the Internet of Things in, say, five years from now?

    DL:  Data consumption today is driven mainly by millions of people connecting with each other. Data consumption will increase dramatically in the coming years as billions of connected devices go on-line. This new reality will create huge volumes of data traffic.  IoT will thus become an important piece of the telcos ecosystems, leading to more investment in infrastructures, stimulating more innovation, value, and opportunities for new revenue streams and profit.

    TDP: The European commission is working on new proposals to implement greater coordination at European level of radio-spectrum policies. Unfortunately, in the past similar legislative moves were met with strong scepticism from member states. Why this time should be different?

    DL: I don’t think member states want to give to Europe their powers on spectrum policy. But they very much understand that if they want to develop a coherent European digital market, there needs to be some coordination. The repurposing of 700 MHz for Wireless Broadband Services should be done within a certain timeframe all over Europe, otherwise it wouldn’t work. If tomorrow we need much higher frequency bandwidth, for instance to be able to develop 5G and self-driving cars, some sort of European coordination is essential to get there.

    Moreover, a more consistent policy all over Europe should be applied to the length of licenses. These actions are all feasible, and I think member states will in a way or another agree that’s the right path. However, what they won’t allow is that the EU decide on the prices for the spectrum. In any case, I think that we have an opportunity to have more coordination in terms of timing of the auctions and duration of spectrum licenses.

    TDP: What should be the main priorities of the forthcoming proposal on the revision of the EU telecoms framework?

    DL

    DL: We definitely need less regulation to be able to catch up with more competitive markets. In the last 20 years, Europe has been very effective in overseeing the liberalization of the industry securing a high level of competition. However, today if you look at the big players in the industry, either they come from America, or more and more from Asia. Regulation is certainly one of the root causes of not having strong European digital players.

    So, let’s make sure that we deregulate as much as possible, and let competition drive investments and spur innovation. Levelling the playing field is also another important aspect. It is not acceptable anymore that telcos are subjected to obligations on, say, privacy, data usage, or interoperability that are not applying to players operating the same services. The problem today is that regulation is focusing too much on technology and not on services, which produce lot of inconsistencies between cable, telecom, OTT operators providing the same services. So my recipe could be summarized in three elements: less regulation, more level playing field, more regulatory focus on services than technology.

    TDP: A word on the increasingly tough stance of Margrethe Vestager on Mergers & Acquisitions?

    DL: I think we as an industry need to articulate better what we want, what are the risks of preventing telcos from growing in scale, and what is acceptable and what not. We are not very well-structured and every too often we shy away from speaking with one voice. That also explains why it is easier for regulators to take their own direction: we do not make enough efforts to be listened. We can blame regulators or politicians but I think we should also look at ourselves and see how we can be more united to defend our industry. The way we are represented in Europe is still too weak and fragmented.

     

     

    Picture credits: Matt Brajlih
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  • Telecoms

    EU and the 700 MHz: Open up that band now

    If we do not open up this band in Europe as soon as possible we will not be able to get the benefits from 5G. Europe lagged and lag behind regarding 4G but took the lead of 3G. Now we need to take back the lead. One of the most usual and most misused [read more]
    byGunnar Hökmark | 20/Apr/20165 min read
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    If we do not open up this band in Europe as soon as possible we will not be able to get the benefits from 5G. Europe lagged and lag behind regarding 4G but took the lead of 3G. Now we need to take back the lead.

    One of the most usual and most misused phrasings is that we are living in changing times. Times are always changing. New technologies, new products, new services, new threats and new achievements. The really big change would be if the change stopped.
     
    Sometimes changing times is used in a way to create fascination towards the development, making us believe that now we need to do something that is so extraordinary that we need to think at least twice instead of acting now, or instead of letting the society as such adopt to the change.
     
    But for our decision taking it is better to say that the change has already taken place. Now it is only a matter of if we want to catch up with it. This is very much the reality of the digital economy and the digital agenda. The changes has already taken place and now it is up to us if we are to adopt to them in a way that they will serve us, give us a competitive lead and global leaders. The reality is here, we don’t need to think about the changes as magic or mysterious future developments.
     
    Regarding telecom and digitalisation, it is already here. We do not only have a digital sector and a digital economy. Our societies and economies are based on the digital technologies and services that have emerged for decades.
     
    3G was modernisation of telecom. 4G was creating digital services out of telecom. 5G is the full modernisation, industrialisation and transformation of economies and societies in the world. And it is not futuristic. It is happening now in the timeline that is relevant for us.
     
    In 2017 Verizon tells us they will be the first in the world. It might be more of 4,5 G but still. South Korea plans to roll it out as early as 2017 as well, with full availability 2020.
    In China they will have 500 million users of 4G by the end of this year and their plans for 5G is following the pattern of the others. In Stockholm and in Tallinn we will se early launches aiming for full scale 2020. It is not more fare away than it is happening now and it will transform economies.
     
    We lagged and lag behind regarding 4G but took the lead of 3G. That’s why we got the global champions in the telecom sector and the Americans in the next phase in the digital sector. Now we need to take back the lead.
     
    This is what the discussion on the 700MHz band is about. If we do not open up this band in Europe as soon as possible we will not be able to get the benefits from 5G regarding automotive industry, road and traffic management, manufacturing industries, energy and power sector, agriculture or health care. We need the coverage and the reach of the 700 MHz band if we are to be successful with 5G in these and other areas. That’s the decision we need to take. If we want to take the lead. That should be an easy decision.

     

    Picture credit: phys.org
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  • Telecoms

    Ofcom’s Version

    Joe Smithies, spokesperson for the UK telecoms regulator, defends the recent reform of Openreach, illustrates UK priorities for the review of the EU telecoms framework, suggests caution on bringing in more harmonisation in radio-spectrum policies.   [read more]
    byThe Digital Post | 15/Apr/20165 min read
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    Joe Smithies, spokesperson for the UK telecoms regulator, defends the recent reform of Openreach, illustrates UK priorities for the review of the EU telecoms framework, suggests caution on bringing in more harmonisation in radio-spectrum policies.

     

    The Digital Post: BT competitors lamented that in its long awaited Strategic Review of Digital Communications, Ofcom did not go far enough in regulating Openreach. How do you respond to this criticism?

    Joe Smithies: We made a clear decision to reform Openreach’s governance and strengthen its independence from BT. We want Openreach to a more independent say on its budgets, investment and strategy. We also want Openreach to consult with all its customers, not just BT, about how it develops and invests in its network.

    These decisions are important not only for BT, but for the wider industry. Now we are working on the best way to bring that about, and we will set out detailed plans later this year.

    The Digital Post: How does the review ensure that Openreach improves its record in repairs and invests more in infrastructures, i.e. two of the main criticisms it has been collecting over the years?

    JS: Currently BT Openreach is obliged to deliver a range of minimum standards. The majority of people encountering a fault must see it repaired within two working days, and the vast majority of those requiring a new line must receive an appointment within 12 working days.

    We plan to set out detailed proposals about more demanding minimum standards for Openreach in the autumn.

    On investment, we want Openreach to consult with all its customers, not just BT, about how it invests in the network. But more widely, we will encourage investment from other operators by requiring BT to open up its physical network, allowing rivals to lay their own fibre connections. That can create more rivals networks to Openreach, and in turn incentivise BT to invest.

    The Digital Post: What should be the main priorities to be addressed under the upcoming review of the EU Telecom Framework?

    JS: Concerns have been raised that the framework may not be sufficiently flexible to allow for the regulation of markets where there is a limited or shrinking number of players – in other words, an emerging ‘oligopoly’.

    The framework allows regulators to take action to address damaging market features that could harm consumers, before that harm materialises. So it offers greater flexibility than, for example, remedies imposed during a merger.

    But we feel the framework sets too high a bar for regulating cases where no one company has market power, but the market is still highly concentrated. To address any concerns, the framework requires regulators to show that the market structure is likely to result in a degree of coordination between operators. This may require demonstrating ‘tacit collusion’, which by definition is hard to prove.

    BEREC, the European body of telecoms regulators, raised this issue in detail last year. We’re pleased that the European Commission is also considering the issue as part of the framework review. We hope to see changes that mean regulators have the full range of tools to respond to a changing market.

    Any new powers would need to be applied proportionately, and with care. Checks and balances should be built into the system to ensure that happens. But with a change in the framework we could do more to encourage new operators into the market, and keep prices low.

    The Digital Post: The framework review will also put forward proposals to promote better coordination in spectrum at EU level. What is your view?

    JS: Spectrum is a finite resource, so coordination is important for using it effectively. Generally speaking, any form of harmonisation should be justifiable, proportionate and deliver tangible benefits. It should equally respect national sovereignty.

    The UK works productively with the EU on spectrum matters, and we believe that the current system works well.

     

    Picture credits: Kainet
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  • Telecoms

    3G was modernisation, 4G was and is digitalisation, 5G is industrialisation

    3G changed the telecom markets and paved the way for new services. 4G changed the logic of telecom into the information society. 5G will mean a change in both the structures and the nature of our industries and economies. The introduction of 3G was a hug [read more]
    byGunnar Hökmark | 17/Feb/20165 min read
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    3G changed the telecom markets and paved the way for new services. 4G changed the logic of telecom into the information society. 5G will mean a change in both the structures and the nature of our industries and economies.

    The introduction of 3G was a huge modernisation. It was a revolution for mobile telecom and gave Europe the lead. Mobile telephony was suddenly a popular phenomenon, creating new opportunities and new accessibility. Today there are more mobile phone subscriptions in the world than human beings. It has created universal connectivity. Europe was in the lead of this development but lost it.

    4G is digitalisation. Old services in new structures and new services that we couldn’t foresee. New devices such as tablets and smartphones are a function of these new information technologies and the Internet is becoming a base for most sectors and industries of our societies.

    This development is crucial for the competitiveness of our economies. And Europe is lagging behind in the deployment of 4G. Other parts of the world – such as the US, Japan, South Korea – are as much as four times more rapid in developing the use of mobile broadband.

    5G will be crucial because it is the full industrialisation. It will be transformational for everything from the transport sector to the car industry as well as health industry, entertainment and media and it will change the structures of production as well as the criteria for productivity and marketing.

    In order to take the lead in the digital economy we need to do a lot.

    What we today call cyber security must be the security and defence of our economies, production and supply chains as well as for the credibility of banking and trade and for the protection of our private lives.

    Data protection and cyber security must go hand in hand with the development of new services and be based upon our own actions.

    Regulations and legislation must be technology neutral. The European Union must adapt its legislation regarding IPR, services, copyrights, VAT and sales legislation to the 21st century rather than keeping those of the last. All this is complicated but it must be done.

    It will be much easier if we decide to take a decisive step and take the lead in launching and deploying the nets of 5G. Europe should be in the lead, in a harmonised action where the leading Member states must be the template and where the aim must be to make the European Union the leading 5G economy of the world.

    It will require much more competition between different actors, European markets and trans-European nets, by coordination, harmonisation or by market development. It will require the combination of economy of scale integrated in competition over the borders.

    The release and the coordination of the 700MHz band – now finally proposed by Commission – will be a crucial and formative first step in order to live up to these challenges.

    When we will have the lead in 5G and the best capacities, the momentum and magnitude of change will help us with the reforms needed to take the full benefit of the digital industrialisations that we now are up to.

    To take the lead on 5G is one of the few single issues where we can take explicit decisions, not only define goals and targets, that will bring back growth, leadership, innovations and competitiveness for the European economy.

    The Commission must be tough and forward looking and so must the European Parliament, in order to convince hesitant Member states that Europe means more in the digital era than ever.

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  • Telecoms

    Are telecom regulators against the Digital Single Market?

    European Commission’s plans to overhaul the telecoms rules across the bloc are most likely to encounter the hostility of a powerful, yet unsuspicious ‘lobby’: national regulators. An opinion issued in mid-December by Berec, the Body of European Reg [read more]
    byFrancesco Molica | 29/Jan/20165 min read
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    European Commission’s plans to overhaul the telecoms rules across the bloc are most likely to encounter the hostility of a powerful, yet unsuspicious ‘lobby’: national regulators.

    An opinion issued in mid-December by Berec, the Body of European Regulators for Electronic Communications, appears to anticipate a confrontation with Brussels.

    The Commission has made a top priority to “break down national silos” in the sector’s regulation with the aim of building a genuine single market for telecoms.

    Berec’s opinion is keen to stress that any such achievement “will always be the product of 28 competitive and well-regulated national markets”. While the executive president Jean-Claude Juncker recently proclaimed that he wants “to see pan-continental telecoms networks”, regulators respond that “physical networks are and will remain national.”

    No need to be a telecom expert to guess that the two institutions may have diverging views. This is nothing new. Disagreements of this sort adumbrate a struggle of power that has been playing out for some time.

    Telecom regulators stood firmly against several attempts by former digital commissioner Neelie Kroes to exert more control over their domestic decisions.

    Now they fear that the upcoming reform might curtail their sway in national markets while increasing the Commission’s competences in what is meant to be a fresh shift of power.

    Little wonder that Berec’s opinion appears to air scepticism at the idea championed by Brussels that the current rules governing the sector need a robust modernization as well as more harmonization.

    By contrast, the organization is vocal in praising the existing legislation – although admitting improvements are required – precisely because it leaves regulators enough room for manoeuvre, namely the “ability to address the particularities of their national markets”.

    Greater EU harmonisation should happen only where it makes sense, while preserving national differences, Berec argues. Thankfully, the Commission believes that a fair chunk of those differences are leading to overregulation or regulatory uncertainty that might hinder investment at a time Europe needs to accelerate the rollout of digital networks so as to compete with the rest of the world.

    The mobile sector is a textbook case. Ensuring greater consistency in radio spectrum policies at EU level – a measure the Commission has announced to be part of the reform – will generate mobile network cost savings, as well as additional benefits associated with improved coverage, capacity and network performance, observers say unanimously.

    And yet Berec does not appear to share this idea. To the contrary: It says that “top-down harmonization” might result “in inefficient use of” radio spectrum, “hampering rather than supporting innovation”.

    The Commission is expected to unveil its proposal for the review of the EU’s regulatory framework for electronic communications as early as this spring.

    These rules addressing the regulation of service provision, access, interconnection, users’ contractual rights and users’ privacy were last revised in 2007-2009. The reform constitutes one of the 16 strategic actions of the Digital Single Market strategy unveiled with great fanfare in May last year.

    Berec’s opinions are not binding but must be taken in “utmost account” by the European Commission, according to the EU law, meaning they cannot be simply neglected, not least because telecoms regulators are often tasked with implementing the bloc’s rules.

    It is worth noting that in the past years some regulators chose to ignore Brussels’ decisions or even the implementation of pieces of European legislation.

    At the same time Berec voiced strong criticism at a bunch of key Commission’s proposals. For instance, it objected to a wide spectrum of measures put forward under the “Connected Continent” package, which was also designed to accelerate the building of a single telecom market.

    That is why the European Commission should strengthen the dialogue with regulators before putting out the new legislation so as to minimize their influent opposition (in the past they lamented that they have been not consulted).

    The fact is that further integration in the sector’s regulation is key for the future prosperity of the bloc and is a stepping stone towards a digital single market. Berec ought to come to terms with this basic truth even this means a loss of powers for the national regulators.

     

    Photo credit: Jesse Loughborough
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  • Telecoms

    A connected continent needs more broadband competition, not less

    Broadband competition is not only important for prices and innovation, but also for everyone’s fundamental rights. This is the core message of a new stakeholders' alliance formed by business users, consumers, digital rights advocates and alternative bro [read more]
    byFederico Poggi | 16/Nov/20155 min read
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    Broadband competition is not only important for prices and innovation, but also for everyone’s fundamental rights. This is the core message of a new stakeholders’ alliance formed by business users, consumers, digital rights advocates and alternative broadband operators.

     

    In the middle of her primary election campaign a few days ago, Hillary Clinton made her position clear, reacting to a problem that is becoming more and more apparent in the US: prices for high-speed broadband are far too high in most major cities in the United States and three-quarters of US households have at most one option for purchasing the Internet service.

    Large telecom/cable corporations are concentrating control over markets while end-users are obliged to pay super high fees as access to internet services becomes increasingly pervasive essential to anyone’s day-to-day life.

    This is the outcome of a decision not to regulate broadband access taken by the US Government during the Bush administration. US consumers and SMEs are still paying its consequences.

    Despite contradictory evidence, in Europe, large telcos managed to create the perception that EU telecom markets need to look more like the US, where the market is being dominated by large operators, leaving limited or no room for smaller players.

    Major EU incumbents claim that prices of telecom services in the EU went far too low because of fierce competition and that the moment has come to get rid of “old” access rules that allegedly would be hindering investments in fibre networks.

    The good news is that today a very large group of organisations representing competitive broadband providers, users and end-users of broadband services decided to speak up against the lobbying efforts of dominant telcos.

    Business users, consumers, digital rights advocates and alternative broadband providers are calling EU policy makers to save #netcompetition by strengthening the EU pro-competitive frameworks of rules to guarantee that EU citizens will be always the main focus of policy makers.

    There is no trade-off between pro-competitive rules and investments in broadband networks. Dominant operators and their shareholders in the financial sector keep boosting the message that without regulatory holidays the transition to Next Generation Networks (NGA) will never be achieved.

    Facts prove the opposite: both in the US and in the EU, the full transition to NGA has been completed only in highly competitive densely populated areas. As a matter of fact any private company would avoid investments upgrades if they are not obliged by the threat to lose its customer to competition.

    Broadband competition is not only important for prices and innovation: #NetCompetition is important for everyone’s fundamental rights. If broadband was to be deregulated in Europe, we would be confronted to a few gatekeepers which would be able to control our freedom of communication, restricting our human right to receive and impart information.

    That is the main reason why digital rights advocates are also calling EU policy makers to work towards more competition in broadband. The number of networks should be high enough to prevent a monopoly control from gatekeepers and let operators compete also on data security and guarantees on citizens’ rights and freedoms.

    Today, the European society is raising its voice towards policy makers through the #NetCompetition alliance, urging them to protect and foster broadband competition and user protection against astro-turfed and direct calls for de-regulation.

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  • Telecoms

    What rules for Europe’s digital highways?

    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. Infr [read more]
    byErzsebet Fitori | 23/Sep/20156 min read
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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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  • Telecoms

    Why Vestager shouldn’t fear more consolidation in the EU telecoms sector

    EU Commissioner Margrethe Vestager may have been a little too excessive in cautioning about the risk that more consolidation in the European telecoms sector would lead to uncompetitive situations. In fact, the integration between operators is as much nece [read more]
    byAndrea Giuricin | 27/Apr/20153 min read
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    EU Commissioner Margrethe Vestager may have been a little too excessive in cautioning about the risk that more consolidation in the European telecoms sector would lead to uncompetitive situations. In fact, the integration between operators is as much necessary as it is a normal market process.

    Almost 60 years after the Treaties of Rome were signed the main European weakness remains the lack of a true single market. This is the case in the telecommunications and digital markets, as well as in the railway sector, where different technological standards coupled with national barriers are still preventing a true integration as much as the resulting economies of scale that in these “capital intensive” markets are essential. The consequence, as everyone knows, is that Europe runs more than ever the risk of falling behind competitors that are emerging in the global arena.

    The European telecommunications sector, for instance, has seen a far lower growth in investment than in the United States, where in spite of the recent FCC’s decision on Net Neutrality, operators have been able to exploit the very opportunity to have a single market.

    Not surprisingly, almost all the large companies in the digital world are based in the US or at least in the Chinese market.

    With this in mind it is also obvious that the creation of a proper single European market would entail and favour a certain degree of consolidation within the telecom sector. This is not a bad thing and the EU Commissioner for competition Margrethe Vestager may have been a little too excessive in cautioning about the risk that it would lead to uncompetitive situations. In fact, the integration between operators is as much necessary as it is a normal market process.

    In the European market, if a wave of mergers takes place within a true single market, there will be a few European “champions” competing with each other across the borders.

    These operators could finally begin to think in a European perspective, taking into account that the competition in the digital market will be both vertical and horizontal. A horizontal competition, in a geographical sense, will take place with the increasingly large Chinese operators, and at the same there will be more vertical competition with all those companies resulting from the tech boom (vd. Google, Facebook).

    It is clear that the only way to increase investment in the telecommunications relies on more market integration. In a digital market without less national silos, the presence of larger cross-border players competing with each other should not be feared but is the key to have more investment in place. The digital single market is the only chance for Europe not to miss the train of technological development.

     

    photo credits: Andrea de Poda
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  • Telecoms

    Towards an empty Connected Continent package?

    There is a sneaky sensation when one looks at the “Connected Continent” package, which supposedly should lead Europe’s efforts toward a vibrant, competitive digital single market. Every time the text is revised, it becomes worse.   The rece [read more]
    byAndrea Renda | 08/Apr/20155 min read
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    There is a sneaky sensation when one looks at the “Connected Continent” package, which supposedly should lead Europe’s efforts toward a vibrant, competitive digital single market. Every time the text is revised, it becomes worse.

     

    The recently leaked document, that was the basis for a first exploratory trilogue held on March 23 in Brussels, is no exception: it marks a big step backwards. Here’s why.

    First, the confusion on net neutrality seems to be increasing. The latest text reintroduces the possibility for providers to enter into agreements aimed at creating services with minimum quality levels.

    While this might represent an improvement compared to the text voted by the Parliament in April 2014, which took a much stricter position on net neutrality by prohibiting specialized services, the new text fails to clarify the conditions under which such agreements would be viable.

    The mere indication that the provision of services with guaranteed quality (e.g. for e-Health, or for the connected car, which require sufficient latency to be effectively delivered) should not materially impair the quality of internet access for other end users does not bring any legal certainty.

    Will the assessment of the “material impairment” be performed by national regulators? Ex ante or ex post? Based on what parameters?

    This rule, if maintained in its current state, might prove to be very difficult, if not impossible, to implement in practice. Not surprising, since a similar rule is already in place as Article 22 of the Universal Service Directive since 2009, and has remained practically dead letter.

    Second, the most recent text postpones the achievement of zero roaming prices to 2018 by implementing a transitory regime called “roam like at home plus” (RLAH+) proposed by the Latvian Presidency.

    However, a complex rule is being devised, which would allow the “plus” to be applicable only after a basic roaming allowance is exceeded. The Presidency proposed that the basic roaming allowance could be available for a minimum of 7 days, and that it could include a minimum daily consumption of 5 minutes of voice calls made and received, 5 SMS sent and 5 megabytes of data roaming services used.

    Third, and most importantly, there is no trace of the original proposal to coordinate spectrum allocation in certain key bands.

    While the original proposal was already a watered-down version of what many claim should be the real objective of the EU institutions – a pan-European spectrum policy – in the new text spectrum becomes a ghost. A deplorable absence, which might bear severe consequences for the future of the Union’s economy.

    Quite surprisingly, the institution that has been most vocal on the need to include spectrum in the package is the European Parliament. But the Latvian presidency seems to have no mandate to negotiate spectrum, a hot potato that was cut out of the negotiation table for lack of consensus among member states.

    These are quite bad news for European citizens and businesses. In addition to a rather disappointing text, the evolution of the debate lends itself to possibly more discouraging interpretations.

    Is the Commission now willing to bargain by offering to anticipate zero roaming in exchange for more leeway on specialized services? Or is the new, “political” European Commission in such a subordinate position to the Council, that anything that is not immediately and almost unanimously agreed by the Member States is taken out of the dossier?

    Is this the real meaning of Juncker’s top ten priorities, and the idea to be “big on big things, small on small things”?

    To be sure, the coming weeks will be an important testbed for these conjectures.

    The next negotiation session on the Connected Continent proposal is scheduled for 21 April: there is still time to table more ambitious and meaningful proposals.

     

     photo credits: Paul B
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  • 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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  • Telecoms

    Can’t ban roaming charges in a disconnected continent

    Despite all the great promises, roaming fees are here to stay for some more time. They are not disappearing until 2018 or even later according to an amended proposal likely to get the backing of European governments as early as the end of February. The c [read more]
    byFrancesco Molica | 03/Feb/20154 min read
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    Despite all the great promises, roaming fees are here to stay for some more time. They are not disappearing until 2018 or even later according to an amended proposal likely to get the backing of European governments as early as the end of February.

    The compromise text put forward by the Latvian Presidency of the EU offers some sweeteners by providing for domestic rates to apply (as of June 2016) only to a very limited amount of traffic generated from abroad. That means travellers will resume paying surcharges after a few calls and some fiddling with their favourite app.

    Extra fees will even keep applying to incoming calls.

    One doesn’t have to be familiar with the technicalities of telecoms regulation to realize that we are nowhere near the “complete end of roaming charges” boasted by the proponent of the legislation and former EU commissioner for Digital agenda Neelie Kroes.

    True, the European Parliament last April voted to ban roaming charges from 15 December 2015. Under the EU decision-making system MEPs will have to agree on a common text with Member states, thus raising the chances of a more consumer-friendly compromise.

    However, given the differences between the two institutions, it is not clear to what extent a deal could restore Mrs Kroes’ pledges, or even if it could be struck at all.

    Political wrangling apart, ending roaming charges gives also rise to a number of complex technical and legal issues. No wonder if national regulators, namely the very bodies in charge of putting the new rules into practice, have cautioned that the job “is not feasible”.

    To be sure, they can’t be accused of siding with mobile operators (which have been lobbying hard against the proposal). Instead, they have simply highlighted an inconvenient truth most politicians in Brussels pretend to ignore: that the legislation is so ill conceived that it would do more harm than good.

    In fact, it may lead to an increase in domestic prices, squeeze smaller (and often more competitive) operators and in the long term impair network investments. Competition will suffer as a result.

    So the paradox here is that a legislation designed to benefit consumers will wound up harming them. This is not a surprise.

    [Tweet “It is the reality of a continent fragmented into 28 different telecoms markets”]

    To her credit, Mrs Kroes tried her best to address this fragmentation only to see the bulk of her “Connected Continent” package being torn apart by Member states and (to a lesser extent) MEPs.

    Alas, many more national barriers should be brought down before an end to roaming charges becomes fully sustainable for the industry and truly beneficial to European citizens.

    It is indeed wrong to assume, as many do, that a roaming-free continent would accelerate the transition to a telecoms single market. It is precisely the other way round.

     

    photo credits: Michael Summers
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  • Telecoms

    Why Europe’s telecom sector needs regulatory modernization

    The European telecom sector is faced with significant challenges in terms of rapidly emerging new technologies and new forms of competition and business models driven by these technology changes. 2015 will be a pivotal year for European policy makers, reg [read more]
    byGeorg Serentschy | 19/Jan/201510 min read
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    The European telecom sector is faced with significant challenges in terms of rapidly emerging new technologies and new forms of competition and business models driven by these technology changes. 2015 will be a pivotal year for European policy makers, regulators and competition watchdogs to improve the environment for the European telecom sector.

    Regulation is the single most important driver in the telecoms sector. HSBC’s Global Regulatory Heatmap report[1] aims to take the regulatory temperature globally and to identify those countries where regulation is most and least supportive of investment, and then to assess how the world’s largest operators are exposed to these conditions.

    The report shows, that the European region has faced the harshest regulation, although there are now encouraging indications the environment here is starting to improve.

    The telecom sector is widely regarded as an enabler of innovation, productivity growth and international work sharing in the context of an increasingly competitive and globalised economy.

    Academic research indicates that economic progress in any given country is driven less by the mere arrival of new technologies, and more by the speed, breadth and depth of their adoption.

    Consequently, it is tremendously important that network operators invest heavily so as to ensure that the latest telecoms technologies are available on as ubiquitous a basis as possible.

    Network investment is important for another reason also: as set out in HSBC’s Supercollider report, it can be clearly demonstrated that the primary driver of lower prices in telecoms is CAPEX.

    In deploying more of the most modern systems, operators take advantage of new technology that is the basis for innovation, capable of handling traffic with greater efficiency, and thus at lower unit cost.

    Lowering unit costs and prices should be a primary policy goal, as it is this that enables the development and adoption of novel applications and contributes towards productivity growth in the broader economy. However it has to be mentioned that there is a Babylonian confusion in the public debate on “price” meaning either the monthly bill or the price per unit (MB, text, minute voice).

    This obviously raises the question of what might induce operators to raise their CAPEX, and here the empirical evidence is plain. The most effective driver of higher network spending is higher EBITDA margin for MNOs and competition[4], as this gives MNOs both the means and the incentive to invest.

    The central challenge facing regulatory policy makers is therefore how to best to secure a benign investment environment, in which healthy margins support heavy CAPEX. To this end it has to be kept in mind, that regulation is the single most important driver for securing EBITDA margins.

    [Tweet “However, Europe’s regulatory framework lacks incentives to invest and shows signs of obsolescence”].

    Therefore it should be fundamentally overhauled in the course of the next framework review process.

    To name only two examples of obsolescence:

    (1) The current framework is too narrowly focused on legacy apps, still centered around traditional voice telephony, text messages and broadcast TV, now just legacy applications of a much bigger space: i.e. the digital services.

    (2) The current framework is inherently slow, leading to inappropriate multi-year/multi-step iterative procedures that fail to keep pace with market and technology evolution.

    Along the future regulatory trajectory in Europe, there are a series of challenging issues and required steps for regulatory modernization to be dealt with.

    When defining the trajectory of regulatory modernisation, Europe should avoid going for incremental improvement and rather aim at an ambitious scenario and step in a “Virtuous Circle”, based on innovation, investment and smart regulation (“Regulation 2.0”).

    The following listing of issues is not comprehensive; the order of listing does not indicate priorities:

    (1) From traditional telco services to internet-based ecosystems – SMP regulation: In the telecom legacy world, telcos acted as gatekeepers aiming at monetizing single products or integrated value chains. Now, ecosystems controlled by the internet giants (OTT players or ‘edge providers’) are the new competitive engines that capture and deliver value.

    These competitors were never foreseen by regulators, and yet have amassed customer bases that dwarf those of even the largest telecoms companies (for example the merged Facebook – WhatsApp conglomerate).

    The emergence of such powerful forces does prompt the question of whether conventional regulation of the sector, stratifying the industry between incumbents obliged to provide wholesale capacity and resellers able to obtain this capacity on favourable wholesale terms, still remains appropriate.

    (2) New regulatory bottlenecks: driven by the changes described earlier, traditional regulatory bottlenecks, like access to infrastructure will become less important or even become obsolete whereas access to the huge data collection and processing capabilities of the OTTs will be (or is already!) a crucial bottleneck for all players in the digital services sector to be dealt with.

    (3) Market definitions: Will the current set of ‘recommended markets’ (even the most recent revised list of recommended markets) be a future proof instrument for regulators and competition authorities?

    Looking at the Facebook – WhatsApp merger, access to data collection and processing, the ‘machine room’ of the internet giants seems to be a relevant topic for market definitions.

    [Tweet “Market definitions need to get broader, more flexible and include OTT”].

    They may also be either extended beyond national borders, or defined at a sub-national level.

    In other words, will we continue to differentiate among separated vertical markets and spend considerable time and resources for their definitions and updates, whilst cross-subsidized business models exploit and profit shifts?

    (4) Definition of services and categories, SMP-based regulation: The names and definitions of the current regulatory categories of “Information Society Services” and of “Electronic Communications Services” used in the European regulation, have become obsolete. The obligations associated with these categories should be reorganized as well as the legal instruments to be used.

    Luisa Rossi 
(Orange) recently pointed out that, “…the old rules are no longer adequate and yet still apply, while new issues are not addressed and require action. This is why it is now important for the legislative framework and regulatory practices to embrace this phase of development…The starting point for the reforms should be the creation of a digital services categorywith the reclassification of traditional communication services, followed by the reorganisation of the associated obligations such as transparency and non-discrimination, security, privacy, data retention, emergency services, interoperability and portability. Hence, digital services would be subject to a common set of rules enshrined in a new horizontal European legislation, whichever the provider or the technology used. Such an approach should be preferred to sector specific rules.“

    (5) Reciprocal regulation: Corporates from neighbouring areas of the economy such as payTV – to give just one example – have the right to purchase telecoms infrastructure, without there being the reciprocal right of telecoms operators to purchase exclusive media content on a similar basis.

    (6) Preference for investments in infrastructure: While it may be desirable to address bottlenecks, such as in the access to fixed-line or even mobile infrastructure (via measures such as unbundling and MVNOs respectively), is it really desirable that those reselling the capacity should have an advantage over those building it? The consequence of this tilt to the competitive landscape will be that less infrastructure is deployed.

    (7) Modernizing Competition Policy: DG COMPETITION statements referring to Austrian consolidation discuss the lack of an entrant as if it was a failure – on the contrary, it was a successful experiment to determine whether there was economic viability for a fourth player, and the answer was clear: there was not.

    A negative outcome from an experiment is not a failure (Karl Popper on ‘Falsifiability’). Let dynamic efficiency gains work! Current competition policy and practice obviously overlooks that a growing part of the entire digital services market (OTTs) is completely unregulated and the remainder – much smaller part of the digital services sector – is strongly micro-regulated.

    A recent set of papers by Papai and Csorba casts doubt on the assumption that introducing more mobile competitors into a national market is necessarily better for consumers. Forget the mantra of the crucial importance of the famous ‘forth player’, there is no special magic in the number “four”!

    (8) Regulator’s dilemma and challenges: Legislators and regulators have two principal choices in this debate; full de-regulation or continued (selective) regulation. Key issues are: is regulation really capable of specifying how markets should function?

    Most would concede this is something that is easier to achieve in industries subject to a slower pace of technological change and disruption, such as utility businesses.

    By contrast, in telecoms the scope for disruptive technologies to transform the industry (for example, mobile, WiFi, voice over IP, OTTs, etc.) makes the system far more chaotic.

    Given this inherent unpredictability, one group argues that there is an argument for allowing the market to take its natural course and that the competitive dynamics of an industry subject to Moore’s Law are perfectly sufficient.

    On the other hand, those who do wish to see continued regulatory intervention argue that the question is rather how better to identify those areas that would benefit from it.

    The so-called ‘three criteria test’ remains the preferred yardstick (the presence of sustained barriers to entry, the absence of effective competition, and the inadequacy of existing competition law to deal with the issue).

    In any case,

    [Tweet “regulators should do their utmost to stay updated with leading edge developments, technologies “]

    and innovations on a global level to understand better the markets on the move and to base their decisions on these insights.

    (9) Spectrum Policy: Europe’s method of allocating spectrum is one of the least harmonised and least efficient on a global scale.

    Most industry parties agree that there is an urgent need to harmonise this process, in terms of awarding methods, coordinating the timing of awards, the duration of usage rights and the conditions on which spectrum can be traded.

    One possibility could be the creation of pan-European licences. However, any such proposals (as per those in the “Connected Continent” (or “Telecom-Single-Market”) proposal seem bound to raise concerns amongst the member states.

    Stronger instruments for the harmonization of timetables and awarding methods, license durations when assigning new spectrum are urgently needed.

    In particular, Europe should be quick and harmonized in allocating and assigning spectrum for mobile broadband in the 700MHz band (2nd digital dividend).

    Measures should include: (1) No – or significantly higher – spectrum caps, (2) Perpetual usage rights with ‘use it or lose it’ rule imposed, (3) Fostering secondary spectrum market.

    (10) Net Neutrality: The EU legislation on net neutrality should allow operator innovation with specialized services, which will be a key for 5G, subject to transparency and other appropriate safeguards. This is also a question relevant for the competitiveness of the European industry.

    If the US will be allowing for the equivalent of specialized services in the future (which is an open issue for the time being), so if EU operators are not able to innovate with specialized services, such innovations will likely happen outside the EU, in places like the US.

    An example would be the Connected Continent proposals on net neutrality, which initially amounted to a very judicious compromise in the eyes of many industry experts, but which was subsequently heavily modified in the European Parliament.

    (11) Change process in EU: Perpetual regulatory intervention tends to necessitate more and complex legislation, and the legislative process is itself fraught with risk, since there may be a tendency for positive proposals to be diluted or even reversed when these highly complex topics are debated.

    (12) Benefits of scale: Scale already plays an important role within the industry, and in future there will probably be opportunities to extend scale effects still further: for instance, as platforms standardise around IP technology, greater cross-border synergies should become feasible.

    This is welcome, since many recent regulatory reforms (such as with regard to termination rates and roaming charges) have arguably reduced the incentive for cross-border consolidation.

    (13) License to fail: In a dynamic and competitive market, there will, by necessity, be companies that fail. Indeed, the very fact that there are losers actually indicates the success of competition.

    However, European regulation has often shied away from recognising this. For example, it has been particularly difficult to use the ‘failing firm’ defence to justify a merger – including in those cases where financial investors would have concluded that the target company could not sustain the level of network and customer investment required to be able to compete effectively.

    Even those industry observers looking for regulatory reform rather than programmatic de-regulation agree that the consolidation of smaller players (thereby creating stronger entities with margins better able to support investment) would be a powerful positive – hence the widespread support for four to three in-country mobile consolidation.

    In conclusion, there is much agreement amongst industry experts that the current regulatory framework in Europe shows clear signs of obsolescence and should be without further delay fundamentally overhauled.

    All sides call for a more cohesive approach, and the formation of a coherent industrial policy for the telecoms sector, so that it is better able to compete against its global rivals – in terms of investment ability, innovation adoption, network capability and attractive unit pricing.

     

    This post was originally published on www.serentschy.com

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  • Telecoms

    EU members’ short-sighted approach to spectrum coordination

    EU governments look pretty keen to scrap plans for more coordination in spectrum licensing across the continent. However, the move may jeopardize future efforts to improve Europe's mobile networks, with negative impacts on consumers and businesses alike. [read more]
    byFrancesco Molica | 18/Dec/20144 min read
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    EU governments look pretty keen to scrap plans for more coordination in spectrum licensing across the continent. However, the move may jeopardize future efforts to improve Europe’s mobile networks, with negative impacts on consumers and businesses alike.

    It is unclear whether EU member states are going to broker a deal on the Telecoms Single Market package anytime soon. Differences abound on the details of Net Neutrality provisions and plans to end roaming fees featured in the proposed bill.

    However, what’s more certain at this stage is that most governments are keen to get away with the package proposals pushing for more coordination in spectrum licensing for wireless broadband.

    If confirmed, the move would strike a fatal blow to the very spirit of the legislation.

    For in a world increasingly dominated by mobile communications there will be no digital single market without a higher degree of harmonization in spectrum policies.

    The expected gains will be paramount to speed up the roll out of 4G networks, bringing huge benefits to consumers and businesses alike. The same goes for the introduction of more flexibility and market-led mechanisms in spectrum usage provided for by the legislative package.

    Speaking at a recent GSMA event, the EU new digital single market chief Andrus Ansip urged governments to make up their minds rightfully pointing out that more cooperation on spectrum assignment “is not a technical issue” but would translate into cheaper and higher quality connectivity, as well as new services.

    MEPs should also step up their pressure by threatening to block any incoming inter-institutional negotiations on the TSM proposal if member states water down or drop its provisions on spectrum usage. It would be a logical step since the European Parliament in April passed an amended draft of the bill that reinforces its original plans on spectrum harmonization.

    The truth here is that auctions for frequencies have long provided an easy source of revenue for governments. This explains their reluctance, also welcome by national regulators, to relinquish powers to a more centralized mechanism of the sort contemplated by TSM package. A single market for wireless communications would be however a far more lucrative bargain for everyone in the long run.

    Although the European Commission has pledged to work out new legislation on ‘radiospectrum management’, it would be foolish to give up on the rules put forward by former EU digital chief Neelie Kroes under the scope of the TSM package. In fact any future bill should build up upon them, impulsing greater harmonization and – why not? – even daring to break the great taboo of pan-European auctions.

    At this stage a fresh legislative initiative would take a while to be drafted and presented, not to mention adopted. Do not expect anything like that before 2016. Meanwhile, the gap between Europe and other regions (such as the US) in LTE deployments, network speeds, total mobile usage or the rollout of advanced services may get bigger to the detriment of the continent’s economy.

    To be sure, a lot is at stake here. Up to the new Commission and the European Parliament to convey this message to their national counterparts.

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  • Telecoms

    Searching for a connected continent

    Europe’s broadband system is highly fragmented and in need of improvement. That helps explain why the European Commission is working toward a digital single market. Reduced regulation and tax rules harmonization play a key role in achieving this goal. [read more]
    byAlicia Richart | 12/Dec/20145 min read
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    Europe’s broadband system is highly fragmented and in need of improvement. That helps explain why the European Commission is working toward a digital single market. Reduced regulation and tax rules harmonization play a key role in achieving this goal.

    The EU’s struggle with broadband connectivity is largely due to inadequate investment in infrastructure from broadband providers. As the European Commission explained in its memo about the connected continent, there are hundreds of telecom operators in Europe, but none active in all member states.

    Many European leaders are increasingly abandoning their regulatory approach and looking to the US broadband model.

    The American market-led approach of facilities-based competition has resulted in greater investment in next-generation broadband technologies. American operators have invested almost twice as much per capita as their European counterparts in recent years.

    While broadband investment can be cyclical, with periods of high spending for network upgrades followed by periods of lower spending and maintenance, the US has been the world pacesetter, investing some $1.2 trillion since 1996. Since then, an average of at least $60 billion annually has been invested to build and upgrade wired and wireless networks, to lay millions of miles of fiber-optic cable (more than in the whole EU combined), and to erect cell towers.

    The EU is composed of some 28 nations, 24 official languages, and 11 currencies.

    America’s de facto single market allows companies of all sizes to achieve scale, and this holds true for both large broadband providers that deploy infrastructure and for entrepreneurs and emerging companies that want access to a large domestic market.

    Indeed, Europe is the top location for America’s digital exports, and some concern exists that the lack of broadband investment in the EU could inhibit the growth for some digital exports to Europe in the future. So both previously mentioned points are really the clue.

    That helps explain why the European Commission is working toward a digital single market across the EU, with initiatives aiming to bring American-style investment, innovation, and entrepreneurship to the European broadband market and Internet-based industries.

    Which are those recipes that could bring us potential success?

    Generally speaking, the European Union should simplify and reduce regulation of broadband providers, remove barriers to consolidation, and embrace a market-led with technology-neutral approach.

    1) Market-led broadband development. The government should not decide which technology citizens should have and shouldn’t give subsidies for broadband deployment where providers are investing. Given the right regulatory circumstances, the marketplace is willing and able to make efficient decisions about broadband.

    A smart vision for broadband realizes that no one network can do it all and embraces a variety of network solutions and innovations that depend on the market. [Tweet “The broadband market, if allowed to operate freely, can meet the demands of today and the future”]

    2) Creating a single market. The creation of a digital single market would permit the consolidation of broadband providers across borders, reduce costs through economies of scale, and create a better business case for operators to invest in broadband infrastructure.

    It would also permit a more effective and continent-wide spectrum policy, the removal of inefficient national divisions, and the introduction of more comprehensive secondary markets to allow more efficient usage of the limited resource.

    Harmonizing tax regimes across the continent would also reduce the burden on consumers and businesses.

    3) Simplifying and reducing regulation. Regulatory reform is another necessary step in resolving Europe’s broadband challenge.

    Removing the open-access mandate would encourage investment by market incumbents in next-generation infrastructure without fear of being undercut by non-investing new entrants.

    Reducing the current regulation may encourage more independent investment in upgrading existing infrastructure.

    And the most important is to remove national restrictions on consolidation across countries. This would allow operators to find the cost savings across borders and build a business case for infrastructure deployment.

    Recently, the European Commission’s vice president for the digital single market, Andrus Ansip, said he is “worried” about the direction that negotiations over the Telecoms Single Market package have taken in the European Council, where member states appear divided on the issue.

    We need to continue trying to convince them and focus on the overall keys to success that I have outlined above.

    More help is required on this.

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