Speech at Hanns-Seidel Stiftung Conference on Europe´s Digital Future

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Speech by Gunnar Hökmark, MEP and Vice President of the EPP Group at the Hanns -Seidel Stiftung Conference on Europe’s Digital Future on the 26th of June in Brussels at the Goethe Institute

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These are days when we all really would like to see a kick-start of the European economy, without any costs but with a lot of investments, new jobs and new services making Europe in the lead.

And I think the time has certainly arrived when we should make the full use of the fact that US is not the biggest economy in the world and China is not the second. China is number three, US number two, and both of them are smaller than the economy of the European Union.

The kick-start will not come out of firewalls, Eurobonds, Financial transaction taxes, redemption funds or even a Banking Union, whatever we think about all of these proposals and ideas. The kick-start can only come from an agenda of reforms that makes Europe more competitive, more investing and more allowing for innovations and entrepreneurships.

It is not by new loans that we solve the problems with too many loans and it is not by more spending that we deal with the problem of too much spending and, for sure, if bigger deficits were the way to economic success we would have no problems at all.

Europe is rich on deficits. The socialist solution of more public spending has been tested, tried and proven to be the problem.

But we need to take care of the fact that we are the world’s biggest economy. We might need structured elements of a banking union, we need to stabilise by firewalls but nothing will help if we don’t get growth and investments by competitiveness. And it is all there in front of our eyes. The world’s biggest economy can turn into the world’s biggest and most dynamic market if we to the right things now. Europe needs acts, not new pacts!

The digital market can lay the ground for the completion of the internal market, making the European Union not only the biggest economy but also the biggest market, where all strategic new innovations and investments can take place, where new companies can emerge and develop and where the critical mass of all innovations puts us into the lead in modernising our societies and defending our values.

Only in a little bit more than one decade Internet has formed fundamentally new preconditions for politics, knowledge, media, financial markets and the global economy. It is in the core of all sectors of our societies and the use of it is determining productivity, efficiency and innovations. We just need to secure that more of this development can increase more here than anywhere else.

The knowledge society is characterized by the gathering of knowledge, or as we know it, learning, developing of knowledge, as we know it research, science and innovations, and the distribution of knowledge, as we know it media, networks, markets and education. If you are in the centre of that you will prosper by others learning, development and science and your own learning, development and education will be in the lead.

This means that research, science and universities will be formative for the centres of the future. But the access to Internet, broadband and mobile data traffic will be crucial for the networks, the hubs, nods or what we talk about.

It is trivial to say to an audience like this, but the growth and development of mobile data traffic and Internet services corresponds to growth in the economy. Increased information and the services connected to that. Increased productivity. New innovations. More trade. More competition. More shared science and know how. More activities in the economy. More exchange.

So all the activities that are required for growth and competitiveness are leading to more data traffic and more use of Internet. If the capacity hinders all these activities we will get less growth, less productivity and less competitiveness. And from another perspective: the more activities we can open up for in the Internet, broadband and through mobile data traffic the more growth, productivity and competitiveness we will achieve. It should be an easy choice.

Two things must be done and I will explain why. We need to have the best capacity for the development of the digital market with the highest speeds to allow for the most competitive solutions and we must secure that all Europeans are connected. That is what can make us the biggest market of the world.

We must use competitions and open telecom markets in order to get as much commercial investments in the new capacities and services and we must use the European funding for broadband in order to achieve coverage where commercial investors can’t invest – thereby connecting the worlds biggest digital market – and in order to reach in our university cities and capitals levels of capacity, above what today is commercially possible – that has so far been seen nowhere.

We should make all the classical universities of Munich, Oxford, Leipzig, Bologna, Sorbonne, Heidelberg, Prague and Tartu, just mentioning a few, and if I might add the most noble of them all, the University of Lund, to global knowledge centres, attracting, developing and distributing excellence.

We can do it. It’s just a matter of understanding the magnitude of change and to act decisively.

First is the remarkable growth in mobile data traffic that we are facing.

Even the most ambitious predictions about Internet connectivity, demand development and capacity requirements keep being overrun by reality. All the time. To illustrate the magnitude of change let me just present a snap-shop on some recent figures from the Ericsson study I guess that most of you have seen, and it doesn’t differ from other corresponding studies and forecasts:

• Global data traffic is expected to grow 15 times by the end of 2017

• By 2017, 85% of the world’s population will have 3G coverage. For many people around the world, the mobile phone will be the only means of accessing the Internet.

• Total smart phone subscriptions are expected to reach around 3 billion in 2017.

• The total number of mobile subscriptions globally will reach around 9 billion in 2017, of which 5 billion will be for mobile broadband

These are impressive figures that will require ambitious policies. If Europe is to be home to the new digital revolution where new services and innovations create prosperity and economic growth, we need to have the fastest broadband speeds in the world.

Second, the RSPP is an important step but we need to do more already now.

• 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.

• A first cornerstone in this equation is the 800 Mhz band which will be freed up for mobile broadband by 2013 thanks to the RSPP. I am glad to see that outstanding issues with neighbouring countries were resolved at the WRC conference in February this year. This will facilitate for the roll out of 4G in Europe.

• Secondly, the RSPP also gives a clear mandate to the Commission to asses and report by 1 January 2015 if there is a need to harmonise additional spectrum bands. The obligation on Member States to de facto report capacity requirements and their current use of spectrum is something they cannot shy away from.

• Finally, freeing up 1.200 MHz for mobile broadband by 2015 as stipulated by the RSPP is instrumental for taking Europe to a frontier position. And reaching the already decided target of up to 1200 MHz requires more spectrum.

But market developments will continue to overrun our predictions. If Europe wants to take the global lead, we must do more.

And that’s my second point of departure for our digital agenda. And that’s where the 700 MHz band comes in. To consider this as a part of the RSPP was a part of my report that Parliament adopted in 2011, although the resistance in Council was too strong for an agreement. But it is still of vital importance, because of its strategic importance for mobile data traffic and because of its international interoperability. And the agreement to assess the future need and to set a target on 1200 MHz was based on the need to have an eye on the 700 MHz band.

• At the WRC-12 in January/February in Geneva, Europe found itself in an unfortunate and defensive situation in relation to other regions with regard to the discussion on new spectrum for mobile broadband communications.

• While the Arab and African countries suggested extending broadband allocations into the 700 MHz band, EU Member States remained passive and hesitant, resulting in a postponement of this decision until 2015!

It is my firm belief that Europe cannot afford to be reactive and hesitant in this issue if we want to take the global lead. Our policies must be future looking instead of conserving old structures. The problem of the broadcasting industry is not a shortage of spectrum, it is that outdated business models that have not kept pace with the speed of development.

• To meet future capacity requirements we must start serious discussions about freeing up the 700 MHz band (and frequencies below) to mobile broadband. Voluntary industry agreements are preferable but legislative action should not be ruled out.

• We should also seek solutions for more broadband capacity in the 1.4 and the 2.4 GHz band as well as looking at higher frequences around 3000 MHz.

Until next WRC 2015 Europe must intensify its discussions on the 700 Mhz band in order to make it available for mobile broadband. Either by encouraging the broadcasting and mobile industries to find a mutually beneficial solution

My third point of departure is that the Digital Agenda needs targets that are relevant in view of the rapid development.

• The EU:s current target that all Europeans should have access to 30 Mbps by 2020 (50% 100 mps) broadband is already outdated. Other global actors are moving ahead with much higher speeds and capacity. In Japan, there are already over 18 million fibre broadband subscriptions. China is installing 35 million fibre connections this year alone. The largest EU Member States have just a few hundred thousand fibre subscriptions 

• If Europe wants to become a global leader in mobile and telecoms we can not rely on outdated targets but must set world leading targets and we need to deliver on these ambitions.

• Due to extensive fiber investments triggered by the exponential growth in mobile data traffic national regulators are rewieving their targets. I would like to launch the discussion that the target that 50 % of households should have access to 100 mbps should be by 2015 and not 2020. And we need to sharpen the target for 100 % of the households in the same way, as well as the targets for 2020.

In my role as rapporteur within the EPP group for the broadband report in the European Parliament on trans-European telecommunications network I am proposing the following actions:

. Much more ambitious targets regarding household coverage and capacity by 2015, following the lines above, as well as 2020, securing global lead and excellence latest at that time.

• If otherwise not, as a criteria for public funding, meaning that it shall only be available in cases where there is no market interest, regarding coverage but also higher capacities.

• A real push for the deployment of ultrafast broadband which can deliver speeds with criteria ranging from at least 1 Gbps and beyond. In order to trigger market investments funds could be used in high density areas and for example university campus, only if these networks deliver world-leading speeds up to 1 Gbps or maybe substantially higher.

• Technology neutrality must be an overarching principle. Investments in fixed and mobile and its different technologies are equally important.

• Projects that receive funding should not block services on their networks.

• Broadband networks that receive funding must be open for competition in the retail market.

We have the means to kick start the economy and make Europe the number one market in the world. I think we shall use all of these means.


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