Speech by Gunnar Hökmark, MEP, on the opportunities and challenges coming from 5G and the digital economy – at the Annual European Spectrum Management Conference

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Ladies and Gentlemen,

If we don’t aim to be number one, we will end up as number three or four.

And in reality, in the global digital economy there is little place for the number two´s. An economy can be the number two, or better the number one, but you need anyway to be the best in a number of sufficient areas because when everyone can choose the number one there will be few reasons to pick the number two.

In the old world you could be number one in Sweden, and enjoy that, at the same time being number three or seven globally. You could be number two in Europe and enjoy that, even if you were only the global number five. But when everyone can choose number one, may it be the number one booking service, the number one virtual reality provider or what ever, why choose the second? ?

The other day I tried a virtual reality headset using only a smartphone as device and I suddenly visited Cuba not Fidel Castro but people dancing in the streets. I could look around and see young women and men dancing a rumba on the street, and turn around to see the spontaneous street orchestra of people just playing, and turn around once more to see their mothers and fathers dance the same dance but maybe not in the same way as the younger ones. And then I ran into my desk, my advisers laughed and there were no more rumba. Virtual reality, so simple with the technologies of today, not science fiction at all any more.

Think about how this can be used while manufacturing, learning and teaching, in real time or streaming, in driving, or partying, when farming, operating, well even speaking at a conference, or at least listen to a speech. And already today we have not only this, we have videoconferences,

driverless vehicles, cars parking themselves, and all of that. We have all heard the mantra that we live in a time of change.

We always live in a time of change. Sometimes the changes are more paradigmical (new world to the English-speaking people) and some times more gradual. Regarding the big changes has already happened. The changing times continuously goes on but The Changing Time has already taken place, now it is more about us catching up and adapting to this new reality. And how we do that will be defining our economies and our competitiveness for years to come. Regarding the big step forward we are not talking about a virtual reality any more. It is a reality.

Once upon a time there was a discussion about electricity as a single phenomena, which could be useful , some thought, for medical purposes, for lightning up 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, neither the electrified sector, it is about a society is based upon 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 to catch up regarding 4G and to make Europe lead regarding the launch of 5G and the next wave of industrialisation.

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

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 oversee 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 the new speeds are allowing us to do the new things with 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.

If we plan to be in the lead of 5G, which will be reality step by step from 2018 with broad commercial launches 2020, this is a crucial platform, together with other frequencies.

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. But that requires we do it all over Europe, as coordinated as possible, allowing for as much competition as possible, because it will be the services coming from the nets that will define the value of the nets and drive the investments.

5G is not local, it is not cross border meaning that you reach from one place to another. It is mobile in the full sense and it borderless. Internet of things or internet of everything, of driverless vehicles or on line health checkup must allow for mobility over borders. And it will include everything, so there will be no new investments in advanced medical services, traffic, cars, trucks, learning and education, or virtual reality in reality without the connectivity. Of the same reasons you don’t invest in factories, trains, cars, computers or medical devices if there is no electricity.

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.

We are now, on Monday, starting the discussions based upon commission’s proposal and the draft report in the ITRE-committee.

The decision 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.

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 many of our countries 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 nr 1. This should also be the guiding principle when we now start to discuss how to reform spectrum policy in the regulatory framework.

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 not any more 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.

We need to launch 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 also see that the spectrum above 6GHz also will be important.

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 economies 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 ongoing rapid development we already today can see, 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. Butstay reassured; I will, together with others, continue to push for change. My view is that we shall be the number one and I will do what I can in order to get it done.

Thank you very much.

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