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
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
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
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.
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: 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
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.
Picture credit: phys.org
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
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.
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
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.
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.