Key note speech at the 6th Annual European Spectrum Management Conference
Speech by Gunnar Hökmark, MEP, European Parliaments Rapporteur on Spectrum Policy the 14th of June
Ladies and Gentlemen,
It’s for sure one of the shortcomings of the human mind that our knowledge and our experiences are based in the past, not in the present and certainly not in the future.
There is, alas, not very much we can do about it since – by definition – our knowledge is a function of what we have learned in the past, and concerns things that have been known, also in the past. We do not know very much about the future and certainly not in the form that we can learn and be certain of what is true and not.
And the same applies to our experiences. They are based upon what we have experienced, not on the events, the developments or the dramas that we haven’t experienced. And even more so for all the things that have never happened, that never took place. It goes without saying that our experiences do not involve those things that no one has experienced.
So, by definition there are certain limits for the human mind when it comes to understanding the present and the future. It has been said that it took three decades after Thomas Alva Edison invented the electric bulb until we let the lights turn downward and not upward, as had been the case for candlelight’s during centuries. So strong was the mind-set formed by the candlelight.
This is a relevant reminder when we talk about the use of spectrum, broadband and Internet. For decades the spectrum has been about radio and TV. And we tend to think about radio and TV as they were during the last decades, when we grew up; when we looked at the movies we loved or were bored of.
Maybe Bonanza, the Flintstones, Dallas or Friends. The news we got. President Kennedy. Vietnam. The Berlin Wall. Its rise and its fall. The poor people of China and India. The underdeveloped world of Asia and Africa. The leading role of the so-called West. The leading universities. The dominance of knowledge and science. The global economy as defined by the transatlantic economy.
It’s all there in our knowledge of how things are, or rather were, and all the experiences have formed our ideas of what TV and radio are about and how we consume news, politics and entertainment.
The Cold War and its logics. The defence and security that were based upon the division of East and West. The Iron curtain and the enormous investment in armed forces in Europe, east and west, as well as in the US and the Soviet Union.
The way we developed the management and the use of spectrum was subordinated to all this. How things were. Spectrum allocation based upon the technologies of that time, on the borders and challenges of that world, and on radio and TV as they were.
The world is very, very different from that. And the world we are preparing for even more so.
We do certainly not lack challenges to our security but they are of a different kind. We do for sure have borders between democracies and dictatorship but they are not as geographical and not as given as they once were. We do for sure listen to news and enjoy entertainment of different kinds, but not in the same way as we once did.
Culture is developing in the structures of today, not of the past. Politics and communication are based upon the opportunities and preconditions of the modern global society, not in national entities of the past. I do not need to mention Face book and the Arab spring but it is worth remembering how surprised we were that a friendship community could threaten the power base of brutal dictatorships. It was not a marginal phenomena but crucial for a society’s transformation.
We all know these things but when discussing spectrum politics we are all, more or less, trapped by the logic of the candlelight. That’s why some see a conflict between TV and mobile data services. But the truth is that TV is not and will not be as it was. Also with more frequencies allocated for mobile Internet there will be terrestrial broadcasting and more opportunities for content, news, culture and information than there ever was.
But there is more in it than that. Because time goes by.
The spectrum policy we are discussing here today will get its first consequences in reality in 2013, when the 800 band hopefully is freed all over EU. And that will create the new preconditions for technologies and services to develop which will change things a little bit till 2015. And 2016 there will be an International Teleconference addressing the topics we choose to discuss today. And what happens then will be determining the competitiveness of European economy the following years. And suddenly it is 2020!
And the world of that time – ten years ahead – will be looking very different from the world of today, which is very different from the world of ten years ago. Maybe even more in the world of information technologies than in other parts of our societies. And most presumably the information technologies of that time will be defining the core of the society regarding the economy, competitiveness, information, knowledge, security and politics.
Because this has been the trend the last 15 years since the Internet as we know it emerged. The first web pages came somewhere around 1995 and 1996. And it all changed the logics of information, media, economy, financial markets, trade and shopping. And it will do so the coming 10 to 15 years. All the services we are talking about. What we are already experiencing, we will experience even more.
In the past we could call China and India emerging economies. We still do – in the spirit of the candlelight – in spite of the fact they are leading economies transforming the logics and the balance of the global economy.
Whatever we call them today, the problem of Europe is that we are not the leading economy we want it to be and that we need to be if we are to have the prosperity and influence we want us to have.
They were emerging economies; today they are competing economies. And they will be even more. We need to face that challenge. And I want Europe to be number one. Not number three or four.
Our leadership in Information Technologies, broadband and mobile Internet will be crucial in that respect.
Let me make three points in this regard:
First: the Internet and competitiveness.
It is beyond doubt that the development of the Internet has played an important role in the economic growth of the last decades, and that it will continue to do so. This goes for the Internet as whole as well as for broadband.
People have compared the Internet to the printing press. But the Internet does only affect they way we distribute and receive information; it completely transforms the way we live, work and interact. Therefore, it is more comparable to the invention of electricity. Some experts argue that the Internet is already affecting growth more than did the industrial revolution of the 1800s.
According to a recent McKinsey study, the Internet accounts for 1, 672 billion dollars of the global economy, and for one fifth of GDP growth in mature countries during the last five years. Over a fifteen-year period, the Internet accounted for 10 percent of GDP growth in advanced countries.
Almost 8 trillion dollars exchange hands each year through e-commerce.
Contrary to popular belief, the bulk of Internet-generated growth does not take place in ICT firms. In fact, 75 percent of the value added created by the Internet is in traditional industries. True, the Internet makes jobs obsolete. But for each job that disappears, the Internet creates 2.6 new ones.
High-speed Internet plays a particularly important role in this regard: According to a 2010 World Bank report a 10 percentage-point increase in high-speed Internet connections gives an increase in economic growth of 1.3 percentage points. Other studies have found very similar results.
Leadership regarding broadband in general and mobile broadband in particular, cannot be overstated.
It transforms the use of the Internet from “e” as in electronic to “u” as in ubiquitous. You don’t go online. You are always online.
It reduces telecommunications and transaction costs for businesses and increases transparency and competition.
It enhances the human capital by the availability of knowledge in a plurality of situations.
According to one study, Internet business solutions have enabled private companies in Germany, France and the UK to cut costs by a collective $8.3 billion in and increase revenues by a collective $79 billion.
Leadership in mobile broadband will not only define competitiveness in the ICT sector but growth and competitiveness in the economy as a whole.
Second: the Internet and Europe.
In the 90-ies Europe were in the lead of mobile telecom. That’s a leadership we have lost and now need to regain.
In the year 2000, when phones were primarily used to make calls, Nokia was king. Now when broadband and technological developments have allowed the handsets to be computers used for numerous purposes, Apple has taken over the throne.
And this transformation is going ever faster and will have an even bigger impact on economy:
According to Cisco, the American network giant, in 2010 the mobile Internet was three times as large as the entire Internet in 2000. According to the same company’s Visual Networking Index, mobile data traffic will multiply 39 times the next five years. In 2015, 718 million people will reach the Internet only through a wireless device. In 2020, 50 billion devices will be connected to the Internet.
So, just to be in pace with the development of today we will need increased mobile broadband capacity. Otherwise we will run into bottlenecks and the most rapid development will take place somewhere else with the consequences we will loose the leaders we have.
Third: the global economy of the year 2020.
The largest economy in the world of today is that of the European Union.
According to this perspective, China is now the world’s third largest economy, behind the EU and the US.
The investment bank Goldman Sachs projects that by 2035, the joint economies of the BRICs (China, India, Brazil and Russia) will be larger than those of the G7 as a whole (United States, Japan, Germany, United Kingdom, France, Canada and Italy).
The financial crisis and lacking competitiveness have damaged the economies of the United States and of several European countries. Kishore Mahbubani, a Singaporean scholar, argues that the collapse of the Western financial system “has accelerated the end of the era of Western domination of world history”. Also, former IMF economist and Harvard professor, Mohamed El-Erian has called the post-crisis world economy, with high growth in the developing world and slow growth in rich countries, “the new normal”.
Disregarding the EU as an economy, in PPP terms the world’s ten largest economies are the US, China, Japan, India, Germany, Russia, the UK, France, Brazil and Italy. In 2020, China will have overtaken the US as the number one economy, Russia will have surpassed Germany, India surpassed Japan and Mexico will have replaced Italy on the list.
This is the perspective of the present and the future.
A rapid, seismic shift in global economy. A rapid development of the Internet, of broadband and of all the services that are being developed in this context. An even more rapid integration of the Internet and broadband in the regular economy, making ICT not only a strategic sector but a driving force of the whole economy, determining the competitiveness and the dynamics of modern knowledge economies.
That’s the way it is today and that’s the way it will be even more the next decade. By taking the lead of mobile internet we can secure not only leadership for the telecom industry but also regarding the digital agenda that can transform the European economy into one market, making full benefit of the fact that we already are the biggest economy but so far with fragmented markets.
Leadership regarding broadband and mobile data services means leadership regarding the digital market with all its new services and increased competition and can create a momentum for achieving one internal market for the European union, making EU not only the biggest economy but also the biggest market of the world.
That’s why I want Europe to be in the lead regarding mobile broadband and data services. They are crucial for capacity. Together with fixed lines, they are achieving a coverage that can connect 500 million people in the world’s biggest economy to one market and they can change the logic of the internal market. And just as important, or even more important, they are creating a connectivity that creates more services, new ways of usage and more ideas for the future.
That’s why I want Europe to be in the lead. Because the lead in ICT, mobile broadband and Internet will give you the lead in new services, new applications, new technologies and new competitiveness in the economy as a whole.
I differ from those who think it is enough to be number three, if there are any. And if we in Europe want to be number one we must make sure that we have the number one opportunities for taking the lead in the telecom sector regarding new devices, hard ware and soft ware. We must be in the lead for new services that can reach a leading market of 500 million people.
We must be in the lead creating room for the Google’s, Facebooks, Yahoos and Apples, and Blueberries, of tomorrow, with companies staying and developing worldwide in Europe.
We must be in the lead allocating frequencies making sure we have the best connectivity, capacity and speed for new services and the most modern economy. Bridging the digital divide. Paving the way for transnational services. Creating the opportunities for the highest speeds possible. That’s what we can do, as politicians.
That’s why I have proposed, with the support of the European Parliament, that we shall be number one in allocating frequencies and capacity. Not less than 1200 MHz not later than 2015. Open up the 800-band not later than 2013. Open up the bands of 1,5 MHz and 2,3 MHz and allocate the 5Ghz band for free and unlicensed use, be it local events or wifi or whatever.
That’s why we need to discuss the need of the 700 MHz band that propably will be one of the universal bands for mobile data traffic, defining standards for products and devices where Europe needs to fight in order to defend market positions.
That’s why I have proposed the inventory stretching from 300 MHz to 6Ghz and in the next perspective from 6Ghz to 70Ghz.
In the upstart of negotiations between Parliament and the Council there is one fundamental question we all have to answer. Do we want Europe to be the number one economy? Do we want Europe to be in the lead of mobile Internet and broadband? Or not? I want the member states to respond to that question. It is not rhetorical but it is demanding.
If we want to be number one, we need to take the lead regarding spectrum allocation for mobile data services. That’s what it is about. Those who prefer us to be number three, or four, should announce that. I myself will do what I can in order to lay the ground for a new European leadership. That work starts now. If you want to change you need to change.