If you are like me then modern life, for better or for worse, revolves around our phones.
Smart phones have allowed us to work and communicate, as well as enjoy staying in touch with our friends and family wherever we are in the world.
But what underpins that service you are getting? Policy. If we get the decisions wrong about how to legislate the telecoms market then you, me and every small and large business will suffer. So telecommunications policy across Europe couldn`t be more important.
Just recently I gave a talk at the launch of a new report from the New Direction Foundation, a Conservative think tank which looks at how to solve Europe’s issues from a Conservative perspective.
The report was written by Roslyn Layton and I have included my introduction speech below to give you an idea of what she was arguing and my thoughts on the topic.
My opening remarks
Telecommunications policy has been a topic of keen interest for me for longer than I really care to admit. In a previous career, I went so far as to write a book on it: the originally titled “EU Telecommunications Policy”, which I can’t recommend highly enough if you want insights into the latest sector developments in the EU … of 1996.
I’m joking of course. In many ways the telecommunications sector, and the needs it caters to, are fundamentally different to those of 20 years ago, with our modern, connected society requiring the transfer of levels of data that would have previously been unfathomable. As such, the significance of this industry for the provision of services now seen as essential parts of contemporary life, has only been reinforced. The choices we make about the future of this industry have never been so crucial.
It is with this in mind that I am delighted to welcome Roslyn Layton’s latest contribution to the debate with her report on “Next Generation Telecom Policy and the Digital Single Market”. Ms Layton has been a fearless advocate for the modernisation of our telecoms rules and with this report she tackles head on the unavoidable issues that need to be debated, unafraid to critique the European Commission’s approach up to now.
I have also at times been a critic of the European Commission’s approach to telecommunications policy. I thought some of its intervention on roaming was an unfortunate example of heavy handed and top-down regulation akin to Soviet economics that would distort the workings of the market, leading to relatively wealthy roamers enjoying cheaper services while many poorer pre-pay customers saw their prices rise or saw reductions in how long their credit was valid.
However, with the Commission’s latest publication on the Digital Single Market, the “Digitising European Industry” package, I see two broad goals that I can support. The package aims to both support the creation of a strong digital sector across EU member states and ensure that the benefits of digitalization are spread across all industries. These are the worthy targets, brought home by figures showing that almost a third of the growth in industrial output in Europe is due to the uptake of digital technologies. However, the precondition for achieving them is connectivity.
What we have seen in this package is the recognition that private sector investment is crucial for the development and promotion of digital technologies. The telecommunications sector is no different. To achieve high speed connectivity we must encourage private sector investment in next generation access technologies that can deal with the volume of data that will be passing through these networks in the gigabit society at the speeds that will be expected.
In order to do this, companies must be able to able to take the necessary business decisions for these investments, and will need to achieve economies of scale. This leads us to question existing assumptions such as whether national markets need 3 or 4 telecoms operators to be seen as competitive, given that developments in technologies can introduce new competition into traditional markets. While there remain difficult choices to be made, we must not rule out options just because it is how we have operated in the past. Other questions include: do we need to see the emergence of pan-European providers? If so, should we leave it to the market? I worked on a project in the late 90s for a large national operator that was seeking to offer pan-European services via acquisiton, new licences, virtual operations, franchisng etc. Or should the European Commission encourage mergers even where this may lead to fewer operators in a national market? Roslyn Layton’s report suggests that if we truly aspire to pan-European providers we must first enable companies to take advantage of synergies at national level.
Connected also to this issue, is the familiar European issue of fragmentation. To its less forgiving critics, Europe can still seem to be split in 28 directions. US firms in this sector of course do not have to deal with the same problem in their home market where they have a single market providing them rapid access to consumers across the country and the ability to quickly scale. Progress has been made in the EU, but we must continue to push the Commission to deliver on overcoming remaining barriers, including through measures such as the upcoming free flow of data initiative. However, we need to recognise that this will encounter some difficult political questions. For example, it will be difficult or even impossible to manage spectrum on a pan-EU level when so many countries jealously guard their national competence in this area. At the moment, we are seeing a referendum in my own country of the UK where the issue of sovereignty is an issue.
With the EU lagging behind countries such as South Korea and Japan on measures of connectivity, it is time to act. Even in undisputed global hubs, such as my own home-city of London, there are spots where it is impossible to get a decent mobile signal. It is for this reason, incidentally, that I launched the “No bars” campaign in London, where users can report areas of low or no coverage, putting pressure on mobile operators to take action. In rural areas, of course, the problem only worsens.
It is time then to take action to learn lessons from those global leaders on connectivity that we have previously praised. How do we move beyond paying lip-service and really embrace a pan-EU telecoms market. We are five months into 2016, the year that the Commission has promised will be a year of delivery for the Digital Single Market. Some of the pieces are beginning to move into place, but we must properly take on board the contributions from experts such as Roslyn Layton as well as the voices of all those consumers from the “No bars” campaign and other similar initiatives who just want a decent service. Let’s look at how we can push the telecoms sector in the EU to be a global leader in connectivity, with companies delivering state-of-the-art products across borders and at scale.