Plan for Single EU Telecom Market Finds Strong Agreement, Some Skepticism from Key Players

Europe is on the “cusp of an amazing transition” but innovations from connected cars to 3D printing rely on fast, pervasive networks, said Digital Agenda Commissioner Neelie Kroes Monday at a European Commission-hosted conference on a single European telecom market. Just 2 percent of EU homes have broadband speeds above 100 Mbps, and European mobile data speeds are half those of the U.S., she said. Combined, the U.S., Japan and South Korea have 88 percent of the world’s 4G connections, Europe 6 percent, she said. With current trends unsustainable, the EC is preparing to propose a single telecom market. Representatives from the telecom, consumer electronics, financial and consumer sectors agreed such a plan is necessary, but differed over its key elements and feasibility.

European operators find it too hard to break into new markets because they need separate authorization for each country in which they seek to operate, Kroes said. A “passport” from one EU country would allow them to set up in any other, she said. But that requires cross-border networks, with better interconnections and new access products, she said. Wireless networks need better spectrum coordination, she said. Handset makers mostly ignore the European market when planning their latest gadgets because each country holds spectrum auctions at different times and under differing conditions, she said. There must be consistent rules, standardized quality of service, and even-handed rules to safeguard the open Internet, without banning premium services, she said.

"We shouldn’t be fighting over crumbs: We should be making the pie bigger,” Kroes said. The EC will do that with fewer barriers, better services and fairer prices, she said. Colleagues in the EC, the European Parliament and the Council agree on the need for a connected continent, she said. There will be a proposal “first thing in September,” she said.

For telecom regulators one big question is what customers will be willing to pay for in the future, said Göran Marby, director of the Swedish Post and Telecom Authority and incoming chairman of the Body of European Regulators for Electronic Communications. If everyone needs Internet access, another issue is how to ensure they get it at affordable prices, in order to avoid another digital divide, he said. Maybe future market definition should include speed, access and mobility, he said. The biggest issue in the end is whether, and when, to deregulate, he said.

This is about “scale and innovation,” said Ericsson Chief Technology Officer Ulf Ewaldsson. The environment must be right for investment, new business models and new services, he said. Many U.S. and Asian operators view their networks as platforms for over-the-top services, but that’s not as true in Europe, he said. The real limiting factor for new services is the networks, he said.

There must be a “strong consumer dimension” in the single market package, said European Consumers’ Organisation Deputy Director General Ursula Pachl. Reform must include four consumer “ingredients,” she said: (1) Transparent information and fair contract terms must become a reality. (2) A clear right to a neutral and open Internet must be more enshrined than it is now. (3) Europe must become mobile roaming-free. (4) Current laws and general consumer protection and contract laws must be better enforced. Although Kroes wants a radical legislative compromise, compromise in relation to consumer rights isn’t possible, Pachl said.

The European Telecommunications Network Operators’ Association has been vocal about creating a well-functioning single market for e-communications, said ETNO Executive Board Chairman Luigi Gambardella. The priority should be to boost growth and competitiveness and create new jobs, and the key to reaching that goal is to “reverse the current downward spiral” of the industry, he said. Achieving the goal calls for “clear, ambitious and concrete reform proposals,” something the EC hasn’t come out with yet, he said. These difficult days are “no time for minor reforms,” he said.

The single market review should focus on areas where there are roadblocks to cross-border services, said European Competitive Telecommunications Association Director Erzsebet Fitori. One key area where end-users demand a pan-EU system is in business e-communications services, she said. Multinational companies want cross-border solutions tailored to their circumstances, but businesses operating in multiple EU countries have less choice than mass-market consumers because of the 27 different regimes, she said.

Broadband connectivity is the backbone of today’s society, said DigitalEurope President Peter Olson. Cloud services build on connectivity but also require scale and size, he said. What the EC has proposed so far doesn’t explain how the new rules would be implemented, he said. With spectrum, for instance, the EU has said it wants 1,200 MHz identified for wireless services, but it’s unclear how that will be put in place and how the spectrum will be harmonized in a meaningful way, he said.

Pension funds and other would-be investors “loathe the telecoms sector,” said HSBC Head of Telecoms Research Stephen Howard. That’s relevant because it has a direct impact for network investment, he said. Potential financiers need to see signs of revenue and growth, but Europe’s fixed and mobile sectors are contracting and its market structure is extremely fragmented, he said. The best way to look after consumers is to ensure that the sector is growing to support more enthusiastic investment, he said.

All connectivity depends on communications infrastructure, said GSMA Europe Director Martin Whitehead. A GSMA report comparing the mobile/wireless situations in the U.S. and Europe is a “worrying read,” he said. Capital expenditure is up in the U.S., down in Europe. By the end of this year, around 20 percent of the U.S. will be on LTE, in Europe less than 2 percent, he said. Part of the reason for that divergence is that the U.S. market structure allows operators to take advantage of scope and economies of scale, he said. A single EU market would help European operators do so as well, he said. Among other things, the package should include a coordinated, pan-EU approach to spectrum, and more consistent application of rules, he said.