Neelie Kroes, the outgoing EU digital commissioner, fired some parting shots at telcos last week, telling them to “adapt or die.” Speaking at a Brussels conference held by the European Telecommunications Network Operators’ association (ETNO), she said that sometimes “the telecoms sector is its own worst enemy” and warned telcos that if they resisted change, they might be dragged along behind it.
During her tenure, Kroes championed some pretty big changes, pushing for a single telecoms market across Europe, ending roaming fees and strengthening net neutrality.
Telco leaders for their part were also looking forward to the coming change in Kroes’ position. She will have at least two replacements: Germany’s Gunther Oettinger will take over the Digital Economy and Society portfolio while former Estonian prime minister Andrus Ansip will be in charge of the Digital Internal Market.
“Nevertheless, a new digital agenda commissioner alone will not suffice to change the situation,” ETNO Chair Luigi Gambardella said. “We need a profound change of perception, of approach and of mentality.”
Gambardella pointed out that past policies were influenced by a wave of liberalization, serving to open markets and introduce more competition. While this made sense in the past, the ETNO chair felt a new view is required, one that looks to foster cooperation as well as competition.
“Europe is too much fragmented,” he said. “To unify the Continent, not only cooperation between governments is required, but also between companies. And such cooperation cannot be frustrated by overly restrictive competition rules.”
In general, ETNO is in favor of making regulation more “streamlined” (read: less of it.) The association which includes such heavyweights as Deutsche Telekom, Orange and Telefónica, has a specific agenda for regulatory reform including aligning regulatory and investment cycles, ensuring a level playing field and creating incentives for ICT adoption and e-government. (You can read the whole agenda here.)
Kroes, however, rejected the call for less regulation as a cover for resisting the single market.
“It’s all very well to talk about deregulation, but not if that’s a code word for keeping protected national markets,” she said. “You can’t have consolidation on national markets without having a single regulatory framework contributing to a genuine single market.”
Both sides make good points. If Europe is ever going to catch up to the U.S. or Asia, telcos can’t remain ensconced in their relatively small national markets, many of which can’t support enough operators for true competition. However, switching to an EU-wide system requires huge expansion so cooperation among telcos seems necessary at least on some level: partnerships, infrastructure sharing — even some mergers and acquisitions within national borders.
Even with more cooperation, a move to a unified market among the 28-nation EU means that some telcos won’t survive. Just compare it to the U.S. market where four major operators serve a population of 316 million. The EU has a population of roughly 507 million but with dozens of medium to large-sized operators.
With this unwieldy EU telecom sector lagging behind the U.S. and Asia, it’s easy to see why a single market makes sense, but there has to be a balance. Regulators should oversee the transition to a single market to ensure fairness, but too much interference could mean that governmental rules, not competition, will decide which companies adapt and which die.
