Speech at ECTA annual conference
Madame Commissioner, Minister, dear friends of competition,
More growth comes from the Internet economy
The outlook for Europe and the European economy is often painted in gloomy pictures. Indeed, there is much evidence to support this forecast. We are confronted with huge debt burdens and many of our economies are plagued by negative growth and record high unemployment levels. Dystopian commentators are more numerous than ever to predict the decline of Europe.
But ladies and gentlemen, I got news for you; there are ways to exit the crisis. But for this to happen we need to make political choices.
Firstly, unity must prevail over the increasing divisions about the future of the EU. Instead of speaking about a banking/fiscal or political union I have the revolutionary idea to instead start speaking about the European Union.
Secondly, measures to create new economic growth must stand at the top of our agenda. I think that it stands clear to everyone that the old way of facilitating a painless recovery via Keynesian stimulus spending is not an option. If it had been so Greece and Spain would have been the most successful economies in Europe.
The telecom sector should stand at the heart of our discussions about increased growth in Europe. ICT’s contribution to economic growth is probably well know to everyone in this room, but we can remind our heads of states and national leaders that the Internet economy has accounted for 21 % of GDP growth in the world’s most advanced economies in the past five years. By 2016 estimates are that the Internet economy will contribute a total of $4.2 trillion to the G-20’s total GDP, which means that if it were a national economy, the Internet would rank in the world’s top five, behind only the US, China, Japan and India – and ahead of Germany.
Therefore, discussions about the Digital Agenda mustn’t be a side-priority on Europe’s political agenda. Imagine if this weekend’s meeting between head of states would have been dedicated to discuss how to unleash the potential of the Internet economy, instead of how much more subsidies should go to the agriculture sector?
The global telecom train is leaving….
While the EU is spending time on discussing how to preserve old and outdates structures other parts of the world is moving ahead.
The telecom market has shifted to the advantage of big and densely populated markets such as China and India where telecom operators and telecom companies can provide hardware, software and mobile calls at much lower prises than in small fragmented national European markets. In regions of the world where competitors will have immediate and rapid access to big markets for each new generation, the cost for the next generation will be covered much faster than anywhere else, be it infrastructure, technology or services. They will not only have the economy of scale, which they didn’t have only ten years ago but they will also be driven by the scale of innovations.
Emerging economies such as South Korea, Japan and Hong-Kong are connecting their markets with digital highways with fiber reaching around 50 % of the households today.
Japan has successfully tested a fiber optic cable that pushes 14 trillion bits per second down a single strand of fiber. That is 2.660 CDs or 210 million phone calls every second.
……with our without Europe?
This is all happening while Europe’s political vision is to deliver 30 Mbps to all and 100 Mbps to 50% by 2020. It is all happening while Europe’s telecom market is fragmented, suffering from 27 different rules, whether it is about copyright regimes or content distribution.
Is this the answer to more growth in Europe ladies and gentlemen? Is this the answer to our ambition to be nr 1 and a global leader in telecoms? Is this the answer to new services, innovations? Is this the answer to making Europe home to the digital revolution?
I don’t think it is. Let me explain why.
Ericsson’s quarterly report recently showed that:
• LTE (4g) can already today provide speed of 100 Mbps, despite being in the early days of roll-out.
• The evolution of LTE, also referred to as LTE – Advances enable speed exceeding 1 Gbps.
• Today, LTE covers 450 million people globally; by 2017 it is expected to cover around 50 % of the world’s population.
What does this tell us?
It tells us that mobile technology and reality quickly is out-running the Digital Agenda speed targets. It also tells us that we must continue to free up spectrum in Europe.
• The recently adopted spectrum program is one important remedy to address this challenge and will play a crucial part in Europe’s efforts to deploy superfast broadband. More frequencies and more capacity mean higher speeds and more growth.
• Unfortunately as the deadline to open up the 800 Mhz band is approaching, more and more Member States are requesting derogations to postpone this decision. Some reasons are justified for technical reasons and some are political. Only 14 Member States have open up the 800 Mhz band so far and it is now up to the remaining Member States to put economic growth before outdated military and TV technology.
• We must also continue our discussions on the 700 MHz band.
However, investments in mobile and more spectrum is not enough. Data traffic has doubled in 2012 and will continue to grow at a high rate. Investments in fixed lines are crucial if we should reap the benefits of this development and if we should be able to off-load the mobile traffic onto the fixed networks.
Europe needs a real push for the deployment of ultrafast broadband – which can deliver speeds of at least 1 gigabyte and beyond.
If we do not want to continue to lag behind, we must set targets in gigabytes instead of megabytes.
I have now received the Industry Committees support for ensuring that networks which are funded via the EU budget should deliver 100 Mbps to rural areas and 1 gigabyte to urban areas.
European funding for broadband can act as a catalyst for fibre investment, which can crowd in private investments that otherwise would not happen. This would connect the world’s biggest digital market and reach out to our universities, cities and capitals.
If we do not raise the ambitions and speed criteria’s for broadband deployment in rural areas, the digital divide will increase even more. Big cities will move ahead anyway while rural areas will be incentivised to invest in slow broadband connections. This is not the right way to go if the whole EU is to be competitive.
At the same time, it is the market players that should continue to be the main drivers in Europe’s broadband deployment. A fully competitive landscape is the best way to nurture innovations, lower consumer costs and better user experience. The reason for why I only have to pay a couple of 100 euro to fly to Brussels is because openness and liberalisation in the airline industry has made it possible for new challenges to enter the market. The telecom sector follows the same logic. Strong competition fuels innovation and investments.
Finally, the forecast about Europe’s economy is not altogether dark and gloomy. We can create economic growth and the telecom sector stands at the centre of these efforts. Yet, most forecasts predict that new digital revolution will happen outside Europe. But if we embark upon ambitious and concrete reforms, this forecast could also be overrun by reality – tuning Europe into a leading global hub in the future Internet economy