22nd Mar 2018


Competition must prevail in the quest for telecoms investment

  • The Commission estimates that enhanced connectivity due to 5G could generate €113bn of additional benefits annually in four industries - automotive, healthcare, transport and utilities. (Photo: Sandia Labs/Randy Montoya)

With the proposal for a European Electronic Communications Code, the European Commission has expressed its ambition to rewrite EU regulation to enable the arrival of the Gigabit Society in Europe. This ambition covers both fixed and mobile networks and ties in with a strategic action plan for advancing 5G, the next generation of wireless technology in the EU.

The move towards network infrastructures of very high capacity (VHC) promises wider social and economic benefits for public authorities, business and citizens alike.

The Commission estimates that the enhanced connectivity due to the delivery of 5G over such networks alone, could generate €113 billion of additional benefits annually in four industries - automotive, healthcare, transport and utilities.

The creation of networks for the European Gigabit Society requires changes to how networks are built, operated and managed. It requires technical sophistication, planning forethought, and responsible management of the transition from legacy to VHC networks. And ultimately, necessary network development requires investment.

Investment in electronic communications

Investment is not a new challenge in telecommunications. Indeed, the industry has historically been among the most demanding network industries in terms of investment requirements.

Meanwhile, the EU has not only seen next generation access emerge, but also steady progress in fibre deployment. In the EU28, half the homes passed in 2017 were within reach of fibre connectivity.

These developments represent the success of market regulation under the current regulatory framework.

By promoting competition and providing safeguards against former monopolists' significant market power (SMP), the framework has been critical in incentivising network deployments along the ladder of investment. In the EU, alternative operators have thus assumed leadership in driving fibre rollout.

Incentivise investments

Competition has thus driven, and continues to drive, investment. What, then, is the concern?

According to the association representing the interests of former monopolists, regulation today is the principal cause of hampering its members' investments. Therefore, the main concern of regulatory reform under the Code should be to incentivise these investments.

However, just like investment is not a new challenge to the electronic communications industry, neither is today's regulatory framework blind to its promotion. In fact, since its creation in 2002, that framework has entrusted regulators with a responsibility to encourage efficient infrastructure investment.

The principal concern of key developments since – legislative amendments in 2009 as well as subsequent Commission guidance – has been precisely to promote further investment by incentivising former monopolists to engage more actively with delivering the next generation of connectivity.

Most recently, the Commission in 2014 shortened the list of markets recommended for regulation to five - down from the original 18 - thus further loosening the leash on which SMP operators find themselves.

20 years after the full liberalisation of electronic communications in the EU, the freedom of former monopolists has thus increased significantly, due to the combined benefits of competitive entry and adaptations of market regulation.

Nevertheless, former monopolists and their representative association unceasingly continue to call for additional regulatory relief to provide them with investment incentives. The essence of these calls seems to be that - only if entirely freed from the shackles of regulation - can they hope to do what competitors have already been doing for years: invest in first class VHC networks.

Transitioning to gigabit connectivity

Reality, however, presents a different picture. The application of existing tools to incentivise their investments has already allowed former monopolists to make significant strides towards re-monopolising markets and removing themselves from competitive pressure.

The fact that such interventions may stifle competition in fibre deployment irrefutably demonstrates that future EU regulation of electronic communications must not be based on `incentives´ that reinforce already significant market power. To the contrary, significant market power, where it exists, must remain tightly regulated.

In the transition to VHC networks, the responsibility of regulators – just like the Commission's - reaches a new plateau.

Only if regulators carefully choose appropriate remedies to address competitive concerns, and remain capable of doing so, and if the Commission diligently exercises its power of scrutiny, both ex ante and ex post, will that transition successfully move markets further towards effective competition.

Substantial differences in market power remain, notably in resource endowments between former monopolists and alternative operators. Granting those with significant market power leave to sidestep their responsibility contradicts today's framework.

To insert regulatory lacunae into that framework, prospectively allowing such release from responsibility, creates only one type of investment incentive: for investors seeking to eschew competition and reap windfall profits.

Therefore, the Electronic Communications Code must remain thoroughly pro-competitive. Otherwise, VHC connectivity may come at a high price indeed.

ECTA, the European Competitive Telecommunications Association, is the pan-European pro-competitive trade association that represents more than 100 of the leading challengers across Europe. Our members have been and are among the leading innovators in internet services, broadband, business communications, entertainment, and mobile.

For 20 years, ECTA has been supporting the regulatory and commercial interests of telecoms operators, ISPs and equipment manufacturers in pursuit of a fair regulatory environment that allows all electronic communications providers to compete on level terms.

ECTA members are united in their belief that competition is the best driver of efficient investments and the greatest enabler of innovation, choice and benefits for citizens and businesses, as well as for the European economy overall. This is the key message that ECTA and its members promote in the discussion about a European Electronic Communications Code.


Suddenly, digital single market doesn't 'need' EU agency

EU digital commissioner Gabriel downplayed the rejection of the commission's plan for a strong EU telecommunications watchdog, highlighting that the elements of the digital single market are not set in stone.

Privacy rules to create jobs, EU data chief says

Giovanni Buttarelli, the European data protection supervisor, says e-privacy reforms open up new job opportunities for small businesses in Europe and asks EU lawmakers to endorse the proposal in a vote on Thursday.

EU recycles old promise to fund supercomputers

The European Commission promised that the EU would spend around €1bn in public funding on the development of 'supercomputers', but a closer look at the legal documents revealed that this is based on old promises.

An opportunity to help shape a better future for Europe

Political events of the last 18 months have prompted much soul searching and debate over the future of Europe. Romanian MEP, Laurentiu Rebega, believes that the European Conservatives and Reformists Group will best serve his constituents.

Behind the scenes of the Nordic model

The Nordic is comprised of 74 regions and, combined, is the 12th largest economy in the world. The State of the Nordic Region 2018 gives a unique look behind the scenes of the world's most integrated region.

Behind the scenes of the Nordic model

The Nordic is comprised of 74 regions and, combined, is the 12th largest economy in the world. The State of the Nordic Region 2018 gives a unique look behind the scenes of the world's most integrated region.

Stakeholders' Views

This EUobserver section provides a platform for EU stakeholders to communicate positions, views and activities.

News in Brief

  1. Parliament must publish 'trilogue' documents, court says
  2. Italy's centre-right set to share top posts with 5-star movement
  3. Brussels condemns tear gas in Kosovo parliament
  4. Finland pays billionaire €400,000 in EU farm subsidies
  5. 44 leaders sign up for Africa free trade area deal
  6. British 'blue' passports to be made in EU
  7. EU to have 'immediate' trade talks with Trump
  8. Separatist activist renounces Catalonia leadership candidacy

Stakeholders' Highlights

  1. EUobserverStart a Career in EU Media. Apply Now to Become Our Next Sales Associate
  2. EUobserverHiring - Finance Officer With Accounting Degree or Experience - Apply Now!
  3. ECR GroupAn Opportunity to Help Shape a Better Future for Europe
  4. Counter BalanceControversial Turkish Azerbaijani Gas Pipeline Gets Major EU Loan
  5. World VisionSyria’s Children ‘At Risk of Never Fully Recovering', New Study Finds
  6. Macedonian Human Rights MovementMeets with US Congress Member to Denounce Anti-Macedonian Name Negotiations
  7. Martens CentreEuropean Defence Union: Time to Aim High?
  8. UNESDAWatch UNESDA’s President Toast Its 60th Anniversary Year
  9. AJC Transatlantic InstituteAJC Condemns MEP Ana Gomes’s Anti-Semitic Remark, Calls for Disciplinary Action
  10. EPSUEU Commissioners Deny 9.8 Million Workers Legal Minimum Standards on Information Rights
  11. ACCAAppropriate Risk Management is Crucial for Effective Strategic Leadership
  12. EPSUWill the Circular Economy be an Economy With no Workers?

Latest News

  1. EU summit takes hard look at Russia
  2. Germany casts doubt on Austrian intelligence sharing
  3. EU leaders set for 'stormy debate' on digital tax at summit
  4. EU praises Turkey on migrant deal despite Greek misery
  5. Judicial reforms 'restore balance', Poland tells EU
  6. Whistleblower fears for life as US arrests Malta bank chair
  7. Behind the scenes at Monday's EU talks on Russia
  8. US yet to push on Nord Stream 2 sanctions

Stakeholders' Highlights

  1. European Jewish CongressThe 2018 European Medal of Tolerance Goes to Prince Albert II of Monaco
  2. FiscalNoteGlobal Policy Trends: What to Watch in 2018
  3. Human Rights and Democracy NetworkPromoting Human Rights and Democracy in the Next Eu Multiannual Financial Framework
  4. Mission of China to the EUDigital Cooperation a Priority for China-EU Relations
  5. ECTACompetition must prevail in the quest for telecoms investment
  6. European Friends of ArmeniaTaking Stock of 30 Years of EU Policy on the Nagorno-Karabakh Conflict: How Can the EU Contribute to Peace?
  7. ILGA EuropeCongratulations Finland!
  8. UNICEFCyclone Season Looms Over 720,000 Rohingya Children in Myanmar & Bangladesh
  9. European Gaming & Betting AssociationEU Court: EU Commission Correct to Issue Guidelines for Online Gambling Services
  10. Mission of China to the EUChina Hopes for More Exchanges With Nordic, Baltic Countries
  11. Macedonian Human Rights MovementCondemns Facebook for Actively Promoting Anti-Macedonian Racism
  12. Nordic Council of MinistersGlobal Seed Vault: Gene Banks Gather to Celebrate 1 Million Seed Collections

Stakeholders' Highlights

  1. CECEIndustry Stakeholders Are Ready to Take the Lead in Digital Construction
  2. ILGA EuropeAnkara Ban on LGBTI Events Continues as Turkish Courts Reject NGO Appeals
  3. Aid & Trade LondonJoin Thousands of Stakeholders of the Global Aid Industry at Aid & Trade London
  4. Macedonian Human Rights MovementEuropean Free Alliance Joins MHRMI to End the Anti-Macedonian Name Negotiations
  5. Mission of China to the EUChina-EU Tourism Year to Promote Business and Mutual Ties
  6. European Jewish CongressAt “An End to Antisemitism!” Conference, Dr. Kantor Calls for Ambitious Solutions
  7. UNESDAA Year Ago UNESDA Members Pledged to Reduce Added Sugars in Soft Drinks by 10%
  8. International Partnership for Human RightsUzbekistan: Investigate Torture of Journalist
  9. UNICEFExecutive Director's Committment to Tackling Sexual Exploitation and Abuse of Children
  10. Nordic Council of MinistersState of the Nordic Region 2018: Facts, Figures and Rankings of the 74 Regions
  11. Mission of China to the EUDigital Economy Shaping China's Future, Over 30% of GDP
  12. Macedonian Human Rights MovementSuing the Governments of Macedonia and Greece for Changing Macedonia's Name