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
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.