Reforming Europe’s patchwork of telecom regulations could deliver...

Reforming Europe’s patchwork of telecom regulations could deliver up to 750 billion euros ($985 billion) in GDP growth by 2020, said a study for the European Telecommunications Network Operators’ Association. The study by Boston Consulting Group (http://xrl.us/bpg48t) examined how a better regulatory framework could protect competition and incentivize funding of the next-generation access networks needed for the EU to reach its digital agenda targets, ETNO said. While Europe was once a leader in the technologies that make up the backbone of the digital economy, many markets in Asia and North America now have fiber access penetration up to 20 times higher and LTE penetration as much as 25 times greater than Europe’s, the study said. European consumers have slower connections, leading to less value and slower economic growth, it said. Fast Internet connectivity is “the foundation of a modern digital economy” and without it, “Europe will fall behind on the world stage,” it said. European investment in telecom infrastructure fell by about 2 percent a year over the last five years, while investments in other international markets grew by roughly that amount, the study said. If there aren’t “major changes” to the telecom regulatory system, sector revenue will continue to shrink over the next decade, further cutting down on investment in new networks, it said. One of the root causes of the current situation is regulatory distortion in three areas, the study found: (1) Network owners can’t capture the fair returns needed to fund investment because of over- and inconsistent regulation of competitive markets arising from the failure to locally assess relevant competing infrastructures and from preferential treatment of non-infrastructure players. (2) Current approaches require inefficiency in the mobile sector, including in the allocation of spectrum, and create barriers to consolidation in a highly fragmented industry. (3) The lack of a true digital single market with harmonized regulations means that different rules and procedures in areas such as consumer protection across EU countries hinder operators’ ability to reap cross-border synergies. The report recommended a five-strand program to tackle the regulatory root causes of decreasing investment. It called for “substantial deregulation” of fixed-line wholesale access, and a level playing field between network operators and over-the-top services providers. The EU should also pursue a policy that ensures efficient spectrum allocation; permits healthy consolidation in the mobile sector; and standardizes rules and procedures, the study said. The findings “come at the right moment,” as the European Commission has begun reform of telecom rules, said ETNO Executive Board Chairman Luigi Gambardella.