Dear friends of competition, dear distinguished guests,
It is a great honor to have been invited to present my views on the timely theme of this year’s ECTA conference – ”A single market for telecoms”.
It might come as a surprise to you but the world of cartoons and Walt-Disney can offer us some useful insights about the state of the European telecoms market. Do you remember which fairytale that was written by the Grimm brothers and that included elements such as a magic mirror, a poisoned apple and 7 dwarfs? I am of course speaking about Snow White.
At the beginning of this fairy-tale, as I am sure you remember, the queen asked her magic mirror every morning ”Magic mirror in my hand, who is the fairest in the land”. The mirror always replied ”My queen you are the fairest in the land”. A mirror never lies and the queen was very pleased with this. But then one day when Snow White reaches the age of seven she became even more beautiful than the queen itself and when the queen once again asks her mirror, it responds ”My Queen, you are the fairest here so true. But Snow White is a thousand times more beautiful than you”.
What’s the relation between Snow White and European telecoms market you might wonder? Well, in my interpretation of snow white, the queen could be replaced by the EU and snow white could be replaced my emerging economies that aspires to become world leaders in telecoms.
For a long time the EU used to be the only player in town. We used to be global leaders in telecoms.
There was a time when we broke up traditional monopolies and started to deregulate and liberalise goods and services. The number of fixed lines operators doubled between 1998 and 2003 and new entrants where allowed on the market, giving consumers lower prices and a greater range of services to choose from.
There was a time when the world leading telecom companies was Nokia and Ericsson. There was a time when we developed a common GSM standard that created interoperability between handsets, networks and services. EU suppliers were able to develop product and services to a ’home market’ of hundreds of million people.
Increased competition and the GSM standard gave the EU a frontier position in telecoms and contributed to the industrial development in the EU for a decade.
Then snow white arrived and the EU was no longer the only player in town.
Since then the global telecommunications landscape has fundamentally changed.
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.
Asia Pacific will by the end of the year have almost 900 million mobile broadband subscriptions, which is double the amount compared to the EU.
Africa added 27 million mobile subscriptions in the first quarter of 2013 and now has a total of 775 million mobile subscriptions. China has more than 1 billion mobile subscriptions out of the around 7 billion mobile subscriptions. These economies will grow even stronger when they transform these mobile subscriptions into 2,3 and 4 G.
What is perhaps even more concerning is that the EU is loosing out on the global race toward both fixed ultrafast broadband and 4G.
South Korea (population 50 million) has more 4G subscriptions than the whole of the EU (population 500 million). 17 of the 27 EU member states still don’t have 4G at all.
The countries that offers the highest internet speeds in the world are now primarily located outside the EU. Only 2% of all homes in Europe have speeds of 100 Mbps or above. At the end of 2011 the European Union had 4.5 million fibre subscribers, compared to 54.3 million fibre subscribers in the Asia Pacific region and 9.7 million in North America.
So what is the conclusion of all this? Should we like the queen in the fairy tale try to kill snow white?
No, of course not. Competition is good and better results and increased digital ambitions around the world is good for Europe.
The first important conclusion to draw, however, is that the EU is no longer in the lead. Like to queen in Snow White we need to look our self in the mirror and realise that we are no longer the only player in town. There is a sense of urgency to this that I believe that all political leaders and heads of governments must realise.
The second conclusion to draw is that a single European market for telecoms is a crucial ingredient to create more growth and jobs in the EU. I don’t have to inform this public about the growth generating potential that lies within the ICT sector, but this message must be spread to head of states and governments.
The third conclusion to draw is that business as usual no longer is an option.
I think there are a couple of things we need to do. Let me start with the lowest hanging fruits so to speak.
1. Formulate more ambitious targets for the digital agenda. The digital agenda targets for 2020 are already outdated and surpassed by reality. A more ambitious target would be 100 Mbps for all and 1 gbps for 50 % of the population by 2020. If we want to be in the lead we need to formulate targets that are in the lead.
2. Deliver what we already have agreed on. We need a more vigorous implementation of the legislative measures that came from the Framework such as the Radio Spectrum Policy Program. The derogations that more than 10 Member States have asked for on the 800 MHz band is a derogation for economic growth. It hinders the roll out of 4g in Europe and it hinders economic growth.
3. We need to address the economic loss of a fragmented market for electronic communication services for businesses, which amounts to 90 billion. Creating a single, harmonised Pan-European business communications market should be a priority.
A key question in addressing fragmentation in European telecom markets is how we find ways for operators and market players to more easily create economic of scale and distribute products and services to 500 million consumers. I believe we should do the following:
1. We urgently need a political decision to ensure that the 700 MHz band is opened up for mobile broadband in all EU Member States. Pan European licences, where different operators comes together in various consortium has the potential to deliver economic of scale, as well as creating much needed capacity in our mobile networks.
2. While the current regulatory framework have served consumers and operators well we need to overcome the national structures on which the framework is built on. We will never be able to create a single market for telecoms unless we create the right conditions for market players to easily operate on a 500 million consumer market.
3. Streamlining spectrum authorisation procedures across the Member States is a step in the right direction. But we must avoid a piecemeal approach with various pieces of legislation are overlapping each other. Better then to include this in a holistic review of the regulatory framework.
4. To those voices that are calling for less competition and regulatory holidays I would like to ask: When in history has competition been negative for consumers, investments and innovation? The answer to the fragmentation of EU’s telecom markets is not less competition, but different rules that can encourage a pan-European competition between operators.
In 10 years time when we ask the mirror, who is the globally leading internet and telecommnications hub in the world, I don’t want it to be Asia, Latin America or the US. I want the answer to be Europe.