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Presentation by Gunnar Hökmark, MEP, on the opportunities and challenges coming from 5G and the digital economy – at the EU High Level Dialogue on Spectrum-Related Issues

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3rd of February 2016 from 13:00, Charlemagne Building, Rue de la Loi, Brussels


Ladies and Gentlemen,


The development of digital services is day after day leaving a surprised world behind it.


Forecasters, experts, politicians and business people have time after time underestimated not only the speed and the magnitude of change but also the disruptive character of the development. I will not tire you with early forecasts about the needed numbers of computers or about the speeds in the future. It is so to say difficult to forecast, especially about the future.


This mainly has to do with the fact that the digital technologies we talk about are not only evolving but also changing character. What was once used for calculation or word processing and which was at that time fantastic as such, became e-mail, at that time fantastic as such, and search engines, fantastic as such, and social forums, fantastic as such, have developed into a fairly new brave world but on the users’ side much more than on the governments’ side.  It is a fairly fantastic world.


The point is that what we see is not one gradual linear development, not even a gradual exponential one, but a number of parallel and exponential developments in new areas into new services and new opportunities that are beyond the linear developments forecasted yesterday. That’s why forecasting has proved to be so wrong.


If you forecast that new and higher speeds will allow you to download not only one DVD per second but 1000, or 10 000, you overlook both the fact that you do not really download DVD´s anymore, and that the point is not that you today could do it much faster than yesterday and tomorrow even faster.


The point is that we are doing new things with the new speeds, new services and new products, replacing old ones or even making them obsolete. And all these new services are more and more a function of growth, enterprising and economic activities out there in the real world.


That’s why this is not any more about the telecom sector. And it is not any more about the digital sector. This is about our societies and economies that are becoming digital per se and this establishes fundamentally new logics in sector after sector in our economy.


That’s why I think that the Commission proposal on the use of the 470-790 MHz frequency band in the European Union is probably the single most important proposal in order for Europe to recover from the crisis and to regain economic leadership.


Not because it is the most complex proposal or the most complicated area – the refugee crisis, security policy, Syria, Russia, the single market, consolidating public finances and structural reforms are as single items more important – but this proposal can lead the way to a change that has far reaching and powerful consequences for the good of the European economy and the European society in all areas.

If Europe can take the lead regarding the launch of 5G this will have an impact on European competitiveness, innovations in Europe, the development of the single market, development of new global companies, Europe’s attractiveness for investments, investments in infrastructure, global lead on research, development and sciences and the inclusive character of Europe. The world’s biggest economy can have the world’s best consequences of being in the lead in an area, which will define competitiveness and speed of innovations for a long time.

This is not about leadership in an industrial sector, such as telecom, or digital development, this is about industry and development. This is about leadership for Europe.


Once upon a time there was a discussion about electricity as a single phenomenon that could be useful for, some thought, medical purposes, for lighting houses and the development of electricity was a special issue. Today it is not. Production of electrical power is of course important but more as one of the very many industrial sectors we have.


The thing is that our whole society is based upon electricity and it is not possible to think about a modern society without taking electricity for granted. We are electrified, so to say. It is not the electrical industry we talk about today, it is about a society that has developed by electricity.


The same will apply for 5G. If 3G was modernisation by digitalisation, 4G digitalisation of services, 5G will be industrialisation, or normalisation, meaning that the normal of all sectors in our societies and economies will be based upon digitalisation. Just as electricity is normal and was a part of a past wave of industrialisation.


It will define competitiveness, emergence of new services and products, production, marketing, sales and distribution. Health care, transports, communications, participation and everything. It will not be about Internet of things. It will be Internet of everything.


Regarding 3G we were in the lead. Regarding 4G we are lagging behind, in a way that has very clear economic and competitive consequences. When it comes to the launch and the development of 5G our strategy and our goals must be to take the lead because now it is not about modernising telecom, digitalising services or about lower costs for telecom. Now it is about the European economy as a whole.


Many of you know that I have been a strong advocate for releasing the 700 MHz band to mobile services as soon as possible.


For me this is a crucial step in order catch up regarding 4G and to make Europe lead regarding the launch of 5G and the next wave of industrialisation.


We need to be decisive in order to be first, otherwise we decisively will become number two, three or four in a global economy where you cannot be number two because number one is immediately available everywhere, and where being number two can be seen as being the first loser.


The Commission is now finally also taking concrete action in this area and I look forward to start discussions in the ITRE committee and with all stakeholders as soon as possible.


The proposal must allow early movers in the market to release the spectrum as soon as possible while providing strong incentives for others to catch up. The experience from the 800 MHz band shows that we need stronger incentives to ensure that Member States do not delay the actual assignment of the 700 MHz band. I take note of the various deadlines that the Commission has proposed and I will support a line where we will be very firm against those who may be calling for derogations that could delay this process even further.


We cannot again lose time as we did on the 800 MHz band. When it comes to the lower part of the UHF band we should allow enough flexibility for Member States that no longer rely on DTT as their main distribution platform for delivering TV. Internet television and IPTV are now changing the DTT landscape. For example, YouTube is the biggest TV channel for young people in Sweden and several international TV channels are reaching out to more people via YouTube and Internet television than via their linear broadcasting. And this is only the beginning. Our policies must be future looking instead of conserving old structures.


Together with a big majority in the European Parliament, I have in the past pushed for ambitious spectrum reform. We pushed the Commission to present ambitious spectrum proposals in the Telecoms Single Market proposal. I took the initiative to set the world-leading target of freeing up 1200 MHz for wireless broadband in the Radio Spectrum Policy Program. I introduced this target because I want Europe to be in the lead.


We should offer the best opportunities for investors to invest in our economy and in our digital single market. We must not aim for anything less than being Number 1. This should also be the guiding principle when we now start to discuss how to reform spectrum policy in the regulatory framework.


The market is changing, the demand for wireless services is changing and the cross border dimension is changing. The only thing that does not seem to change is national regulators fear of losing control over their national kingdoms. Instead of conserving national silos in spectrum management, we must embrace this change and ensure that our rules on spectrum are able to deliver high fast connectivity for all citizens everywhere.


We can disagree on how spectrum should be managed in the future. We can disagree on the level of EU coordination, if we want to preserve national kingdoms and fragmented markets or if we instead want to increase coordination and build one single digital market.


We can disagree on all this. But it is more difficult to disagree with facts. And one fact in this debate is that the demand for spectrum will continue to increase.


Another fact is that national borders will be much more hindering or even damaging in the future than in the past. We have only seen the beginning of the proliferation of services and applications that need access to spectrum. Driverless vehicles, Internet of things that are moving and internet of things that are all over Europe or the world, Internet of medical care, internet of everything.


We are no longer talking about limited telephone calls from someone here to someone there, or access to media, video or mail from there to here. We are talking about services, products and production in a continuous state without defined borders.


When we now start thinking about a broader spectrum reform, I want to ensure that we do everything possible to make Europe 5G ready. And not only 5G ready by the way, I want Europe to become the globally leading continent when it comes to 5G deployment.


The 5G needs, and the accelerating growth of data traffic, would amount to several hundreds of additional MHz. Freeing up the c-band – 3400 to 4200 MHz – in the next coming steps will be crucial in order to make the full development of 5G possible. And as the Commission envisages, the sub-700Mhz will be important for national deployments but we will see that the frequencies above 6GHz will also be essential.


Clearly we can’t address this issue in 28 different ways; we need one coordinated approach. And we need to form that now.


First of all, if we want Europe to be in the lead of the global digital economy we need more investments that can deliver high speed internet for everyone. In this context, we have to set out and agree on clear and consistent objectives and principles for a successful European spectrum policy.


Secondly, we need to revisit the issues of spectrum assignment procedures and licence conditions.


We need to create a predictable environment, which gives operators the possibility to create economic of scale at the lowest possible cost. We need to continue to discuss how to achieve greater consistency in spectrum assignment in terms of for example timing of auctions, renewal conditions and licence durations. As you may remember, I got the support from Parliament to push for longer licence durations in the TSM negotiations. This is essential to safeguard returns on 5G investments.


Another idea from TSM which I brought forward and which I think is worth pushing is to include a pan-EU or multi-countries assignment procedure in the framework. This would give Member States the possibility to jointly organise a spectrum auction with a common timetable and conditions.


Thirdly, we need flexibility. The spectrum regime that underpins a successful 5G deployment will evolve over time with new applications and services with new needs entering the market. Common rules for tradability and sharing of spectrum will be essential. If you don’t use the spectrum, you should lose it or trade it!


Fourthly, we need to create incentives for ensuring full coverage all across Europe. The consequences of white spots are no longer only that your telephone conversation gets cut off. The stakes are much higher than that. What happens if a connected car loses connectivity when it crosses a border or if your e-health application stops sending signals to your doctor? To ensure coverage we need a framework that encourages nationwide investments.


Fifth, the allocation should not be designed in a way that it defines the competition, rather the other way around, competition should define how we proceed with allocation and actions, but also how we can develop shared use, cross-border functioning networks allowing for small and big operators to offer pan-European services, and accepting new entrants on commercial ground. Competition has been driving investments, more traffic and higher penetration and must be defining the process of consolidation.


Sixth, we cannot rely on outdated targets; we need to set our world-leading 2020 targets for the year 2020, not based on our targets of today. Let us always talk about Gigabits instead of Megabits when we define what shall be achieved by 2020 and let us deliver on those ambitions.


Finally, and this is a key factor to a successful 5G deployment, we need common rules for unhindered spectrum access to dense networks. Wi-Fi and small cells will be crucial to boost wireless capacity in high-density areas and we need to make it much simpler and easier to roll out these networks.


We need to be prepared for the on-going rapid development we can see already today, with mobile data traffic increasing exponentially. 5G will make things even more exponential; if this is a way you can use this phrase.


The important step that was taken by 4G was that applications and platforms changed and developed all the time in order to link up the economy outside the telecoms and the direct digital sphere. Mobile data traffic became a sign of economic activities, economic growth and productivity. 5G will define the economic activities, the growth and the productivity in the whole society. And the change will be remarkable when it reaches out to more or less all economic activities in society, just as electricity.


But the main difference with the transformation that came via the electricity is Moore’s law, which says that semi-conductors will double their capacity every second year.


If we transform the consequences of this into economic development, we will see a doubling of services to half the price.


The more efficient use we can have of the broadband, the more valuable services will be, by lower and lower prices, but higher and higher volumes of traffic. And this exponential development will in itself put strain on the net and will make investments more and more profitable, access more and more valuable when prices will still decrease.


I know that there will be a lot of resistance to changes in spectrum management. But stay reassured; I will, together with other MEPs, continue to push for change. Spectrum has become too important to be dictated by a few and I look forward to a wide debate on this in the coming months and years.


Thank you very much.