by Luigi Gambardella, founder Broadband4Europe
The European Commission should carry out a whole review of the digital sector regulatory regime as soon as possible, because of the following reasons:
1) The telecom industry is a strategic sector for Europe. The perspective of having networks controlled by non European companies entails enormous risks in terms of security for member states and citizens as well
2) The current regulatory regime was designed and thought of for liberalization. Market context has changed. US and Asian companies are in good health, especially internet players in the US and manufacturers and device producers in Asia. The regime is too complex and hampers large scale investments in new broadband networks and service.
3) Europe needs a new wave of investments in the digital industry as a driver for economy recovery: in this moment fiscal and monetary policies have limited capacity to invert the economic cycle – after years of economic turn-down – and public finances are not in such a state to afford broad investment plans. Therefore private investments must be encouraged as much as possible. The investor community is expecting new policy moves soon and they need trust and confidence in the actions of the EU institutions for the next mandate.
The review should be carried out first of all by means of the publication of a white paper or a communication, to be released for public consultation, that gives straight away positive signals for investors, for companies and for citizens. Positive signals are needed because the policy debate is now centred around a draft regulation that, after Parliament first reading, serves no objectives of growth and is reduced to a mere draft law regulating roaming and net neutrality. The Parliament and the Council, which are stuck in such discussions, should be brought on board as from the very beginning in the building of reasons in favour of a general review, while now this is not the case.
The review should take into account the following areas / lines of proposals, that must be further developed and deepened with a new approach and out of the box thinking:
1) The relationship between ex ante rules and competition rules. No more lengthy procedures and reduction of the litigation and appeals. Times are mature, after 16 years of liberalization, to really rethink the way rules are applied to networks. Too much regulatory effort is being spent with no clear results of the positive effects in terms of market growth and rise in investments. Such a brainstorming needs also to take into account the overall role of Regulatory agencies as they are defined in the current Directives and their relationship with competition law authorities. We need a new liberalization: the liberalization from rules that are not fit for purpose and only justify regulatory functions per se.
2) More consumers attention: no more roaming (for example) but more needs to be done. High value content should be made available over networks and new agreements must be encouraged (see e.g. Netflix agreements with Comcast, Verizon and ATT). This requires a review of copyright and the regime of protection of content owners. TV over fibre should be encouraged. All players of the content distribution chain should be brought into the discussion as well. Happy and satisfied consumers will be ready to pay more for better services. We must get out of the regulatory cycle that has brought prices down over years in favour of for free services. Such developments has benefited US companies to the detriment of declining revenues for EU companies (telcos, broadcasters, publishers).
3) A new model of market development: consolidation of players throughout the EU. No other comparable markets have such a high number of fixed and mobile players. More efficient companies will likely generate a new wave of revenues and keep the debt under control (difficult to finance on the capital markets), again generating with more confidence for investors. Such moves can keep under control the risk of massive foreign market access and all related dangers and threats. Can the EU afford foreign control of the information and communication networks? A strategic analysis should be carried out.
4) Privacy and data protection: because of the reasons explained, European citizens and member states’ governments are very concerned about the protection of data. Legislation in favour of better protection has limited effects but more can be done if companies are put in a position to manage traffic and keep data flows under control.