Lack of Full Connectivity Harms European Competitiveness, Panel Says

Europe needs better connectivity to compete globally, speakers said Wednesday at a discussion on the bloc's digital future. They cited former European Central Bank President Mario Draghi's Sept. 9 competitiveness report, which, among other things, urged the EU to "profoundly refocus its collective efforts on closing the innovation gap with the US and China, especially in advanced technologies."

A significant majority (85%) of respondents to a poll for Connect Europe (formerly the European Telecommunications Network Operators Association) think connectivity is an essential service that all Europeans should be able to access, said Alessandro Gropelli, director general-designate of the group.

A key recommendation of the Draghi report is that the EU complete the digital single market for communications, Gropelli said. Connect Europe unveiled its policy agenda for a connected, competitive and innovative continent Wednesday.

Draghi's findings are consistent with other policy documents, such as the February European Commission white paper on mastering Europe's digital infrastructure needs (see 2407030014). That study found Europe isn't doing well on connectivity, said Roberto Viola, director general of the EC's CNECT directorate general.

Key takeaways from the Draghi report are that Europe must make full use of its single market and place a stronger focus on "shared responsibility" for competitiveness, said Bulgarian Member of the European Parliament Tsvetelina Penkova of the Progressive Alliance of Socialists and Democrats group. Along with EU support and funding, the telecom market also needs private sector support before it can innovate on connectivity. Infrastructure is key for digital transformation, said Penkova, vice-chair of the parliamentary Industry, Research and Energy Committee.

Europe's GDP growth is weak when compared with the U.S., said Juan Montero Rodil, Telefonica chief public policy, competition and regulatory officer. Draghi appears to have heard telecom's concerns about meeting Europe's digital targets by 2030, he said: If Europe isn't there by 2030, it won't be in a leading position globally.

One way of spurring connectivity is allowing the telecom market to consolidate, though Viola noted consumers must still have a choice in services: It's hard to believe Europe would want a situation where there's just one operator. Market forces determine market size, and the EC white paper signaled that telcos should decide whether to merge, subject to EU review, he said. The white paper also raised the idea of more spectrum harmonization. If spectrum is harmonized and licenses are longer-term, the operators can decide whether it's to their benefit to merge, he said.

There are advantages and disadvantages to market consolidation, said Penkova: Larger operators would be able to invest in technologies and fill current funding gaps, but consolidation would also create monopolies, to the detriment of consumers and new players.

Asked what could unlock revisions to spectrum, Viola said the issues need to be politically prioritized. He suggested that a layered approach to spectrum regulation, along the lines of the Digital Markets, Digital Services and AI acts, might work.

European bureaucracy is "quite heavy," Penkova admitted. There are too many rules at the EU level, as well as a lack of coordination among national governments. These rules need simplification to ensure competitiveness but not at the expense of consumers, she said. Outdated, overly numerous regulations make it difficult for operators to roll out networks or innovate, said Montero Rodil.

Penkova urged the EC to make sure access and sharing of data across all market players is done fairly. Montero Rodil said the EC should think about how to allow markets to be pro-investment; review current regulations to see if they're working; and ensure that the relationship among all segments of the internet chain is balanced.