It would be wrong to assume that putting operators and Over-The-Top players under the same regulatory framework will provide the ultimate solution to the current imbalances. A true level playing field needs to be created on a fiscal level too, says Gérard Pogorel, Professor of Economics and Management at the Ecole Nationale Supérieure des Télécommunications.
Digital Single Market strategy: Is the European Commission heading the right direction?
I believe yes, and I am very optimistic. The European Commission and the European Parliament seem very committed to opening new horizons. The priorities of the European Commission indicate that they consider the digital economy from a truly holistic perspective putting innovation, investment and growth at the forefront.
They show that Brussels is placing digital at the heart of the future European economy. Against this background, the main priority is to make the European Single Market attractive to investors.
We cannot talk about innovation or growth if the market is not attractive to investors. Telecoms and digital services regulation, as well as new legislation on data protection, are central elements of a consistent framework conducive to investment. I really think that it is with this in mind that the Commission is trying to re-organize things. This is very positive.
The Commission has signalled that it wants to create a level playing field in electronic communications by putting telcos and OTT under the same rules. Is it feasible?
It has to be done, the question is how. Any action should be considered from a global perspective. It would be wrong to take a purely defensive stance. It is important that the players that operate in Europe are put on the same level playing field, but it is even more important that they are encouraged to innovate and invest. They should all contribute financially. That is why a level playing field needs to be created on a fiscal level too. For the moment the fiscal situation in Europe is unbalanced.
We have, on the one hand, telecoms providers paying lots of taxes, say on radiospectrum. On the other hand, we have other players providing the same services, which pay far less taxes or no taxes at all. I believe that it would be wrong to think that putting these services under the same legal framework is the ultimate solution. Requiring OTT players to contribute to the universal service or the emergency number is not enough.
The important thing is that they contribute a fair share in terms of taxes and investments. That’s the main point. The playing field has not only to be leveled, it has also to be opened to innovation. We have to make sure the market is open to new entrants and innovators.
The European telecom sector is said to have an investment problem. What is your opinion?
The European telecoms sector is not attractive to investors for a series of reasons. The first reason is excessive fragmentation. Some people say that this is not important and that Europe can function with hundreds of operators. On the contrary, it is very important because size matters, for instance in terms of access to equipment or influence on the design of devices.
Big operators can enjoy a much more powerful position than small operators. That is why fragmentation is very detrimental to investment, and there should be some level of consolidation of the market. T he regulatory framework should be more oriented towards dynamic efficiency.