Towards a European single market
Brussels, 24 June 2013
Interaction between access to broadband networks and content delivery
The first set of questions concerns the policy measures necessary to support a dynamic interaction between access to broadband networks and content delivery. At the infrastructure level, policy makers have to increase their efforts towards promoting a better broadband coverage across Europe. Existing tools but insufficiently exploited so far such as “one stop shop” licensing procedures, infrastructure sharing, reduction of civil engineering costs are key factors to achieve this goal. To be effective, a single authorization in form of a “European passport”, as the Commission envisages, mainly needs to overcome the existing bottleneck facilities and fully exploit synergies with cross-sector infrastructures to facilitate pan-european network deployment. Besides, the European Spectrum policy needs to be better coordinated. Existing bands have to be fully exploited by member states and new bands have to be released allowing operators to engage in truly pan-European services in a coordinated mode.
At the service level, we need to create favorable conditions for service providers to offer innovative applications and bundles no more to a national but to a European audience. Equally, we have to explore what is the impact on demand of new usage patterns based on cloud-storage capabilities and on the virtualization of the content industry. To achieve a truly single market, the rules related to new content distribution models need to be aligned with the applicable regimes on copyright, advertising and consumer protection, so as to create growth, new jobs and tangible benefits for citizens and the whole European economy.
The regulatory agenda for a digital single market
The second set of questions concerns the shaping and role of the regulatory agenda for a digital single market in such a fast-changing technological and economic environment. Which changes are in fact necessary to the regulatory framework so as to promote harmonization, attract investment, increase confidence in on-line trade and enhance consumer protection? Which concrete policy initiatives are necessary to achieve a better coordination of spectrum assignment conditions for mobile and wireless services? How can we align timing and duration of spectrum rights in order to create greater predictability for market actors? How can the access products and the relevant markets be defined in the new framework? What is the appropriate regulatory treatment of over-the-top services with regard to equivalent traditional telco services when it comes to content, access or privacy? What is the role of BEREC and the NRAs in this process?
A Digital Single Market is vital for Europe’s future
The political Agenda widely recognizes that a smoothly functioning digital market would serve as a positive beacon for the development of the European economy as a whole. The emerging digital ecosystem is characterized by user mobility, universal broadband coverage and ubiquitous communications, as a prerequisite for the provision of seamless services across multiple networks. To make this come true, concrete measures and policy shifts are necessary and they have to be implemented very quickly.
A robust network infrastructure. fixed (FTTC, FTTH) and wireless (4G, LTE), is required all over Europe providing adequate capacity to carry big volumes of data for everyone at affordable prices. Today, millions of subscribers in Europe (Netherlands, Sweden, Germany...) and around the world (Japan, South Korea, USA, Australia), have access to high speed fixed broadband via fiber networks. Equally, 3G and 4G mobile networks are rapidly expanding. Recently in Asia the first testing of 5G networks with speeds over 1 Gigabit/second has been announced.
Currently there are 163 LTE networks in 70 countries around the world with 100 million users, with 90% of these located outside Europe (USA, South Korea, Japan, Canada and Australia) while only 2% of the European households have access to ultrafast broadband, as Neelie Kroes said this morning.
Due to current market fragmentation and lack of consolidation mobile operators in Europe may claim some thousands of customers where their international competitors have already attracted millions users. Moreover, the current lack of harmonization creates significant barriers to both manufacturers and operators. For instance, the European 800MHz band support on terminal side is encountering issues which did not exist for the 700MHz band in the USA.
While the industry strives to provide cutting edge technologies enabling unprecedented exploitation of the scarce spectrum resource, innovation alone cannot cope with the ongoing data traffic increase. New bands need to be made available to meet the European Union Radio Spectrum Policy Program objective of 1200MHz for Wireless Broadband by 2015.
The critical role of Regulators
The rising new era generates disruptive and transformative changes in market, economy and society. New professions are created, new business models emerge, new standards of social behavior are set and new regulatory paradigms are required.
I believe we all agree that achieving a genuine single market in Europe implies creating the conditions that a healthy business environment needs. To this effect, which changes are necessary to our current regulatory framework that has produced so far innovation, competition and attractive consumer prices?
While it is obvious that any regulatory adjustment has to apply on the European market, we need to explore what we can learn from other jurisdictions having successfully implemented advanced broadband infrastructures and services, either through a deregulatory approach, such as the US, or, on the basis of industrial policy considerations, such as some Asian countries (Japan, South Korea) did. To ensure a smooth transition to the new era, it is necessary to properly redefine the rules of the game for government, industry, investors, business and citizens. This task mainly remains with policy makers and regulators who are constantly invited to implement high level political decisions into concrete market rules to effectively balance conflicting interests.
New challenges for regulation
Given the rapid changes in the technological environment and the industry structure, regulation faces new challenges. Based on an ITU 2011 survey of 158 regulators around the globe, national regulatory authorities have traditional competences related to price control, interconnection, licensing, spectrum management and monitoring, cyber security, monitoring of broadcasting, network resilience and so on.
In the new digital ecosystem new issues are constantly emerging, outside of the traditional jurisdictions of the regulatory authorities, requiring appropriate and effective regulatory solutions.
In this context, it is useful to identify some of the objectives that regulation is required to balance, so as to create a Digital Single Market and increase consumer confidence in the new ecosystem, such as:
Access to advanced network infrastructures, by all providers, regardless of whether they operate in horizontal or in vertical markets, under fair and non-discriminatory terms, to foster entrepreneurship and ensure fair competition at the service level.
Net Neutrality that requires uninterrupted data traffic over the Internet must be accompanied by interconnectivity of networks and interoperability of devices, so that they can be connected to any network, providing seamless access to electronic communications services offered across various platforms.
Efficient management of the radio spectrum, a scarce resource that is characterized as the "oxygen" of the interconnected economy, remains a fundamental prerequisite for the success of the digital single market for telecommunications and media. New bands have to be released for 4G and in the near future for 5G networks. Spectrum usage rights have to be granted for longer periods of time by using flexible methods and value pricing schemes. Predictability and stability are key factors to encourage investment and innovation. Moreover, it is vital to promote technological neutrality, shared access to spectrum, flexible exploitation of white spaces and unlicensed bands while encouraging dynamic spectrum allocation, depending on demand.
In fact, in the way towards the digital single market, broadband access is not simply a service but also part of a mission. Such universal access policy may be facilitated through the use of efficient financing mechanisms, either through the market, as for instance through universal broadband funds, where all operators contribute their fair share, or through state aid schemes directly financing operators entrusted with this mission.
Consumer protection is key factor for the proper functioning of the Digital Single Market. In this respect, it is necessary to establish a set of harmonized consumer rights, including switching between providers, tariff transparency etc) a Consumer Charter applicable throughout the EU, available in all EU languages, and make it obligatory for companies to be transparent, online and electronically contactable.
Privacy protection needs to accompany the development of high-speed networks as tools for service provision. Privacy policies have to be perceived as fair business practices by operators. Particular action is also required to protect users and especially children from cyber- criminality, cyber-bullying and from access to harmful and illegal content through content filtering, rating, hotlines etc.
New forms of copyright protection have to be adopted towards a cloud-based single content market, through innovative forms of licensing and taxation of digital goods.
The complementarity between the various regulatory jurisdictions for the holistic response to the challenges ahead is of equal importance. The cooperation of regulators for electronic communications with competition authorities as well as with institutions dealing with privacy and security, will contribute to the effective regulation of the ecosystem. Coordination will reduce conflicts or overlaps between various competencies while facilitating “one stop shop” procedures for market players operating Europe wide and globally.
The increased role of BEREC
In this regard, the role of the Body of European Regulators for Electronic Communications (BEREC) is pivotal. BEREC provides high level expertise, ensures better coordination between stakeholders and harmonized implementation of European rules across national markets.
We have a mid-term strategy and a targeted work plan that addresses the development of next generation access networks in Europe. Such strategy is regularly revisited to adapt in a rapidly changing environment. At the same time, we strive to empower and protect the rights of consumers by tackling issues relating to roaming, tariff transparency, quality of service, ease of switching, together with measures to ensure equal access to electronic communication services of users with disabilities.
Through our coordinated approach, our market intelligence and our constant and open dialogue with all sector stakeholders, we contribute to the development of a competitive and dynamic electronic communications market in Europe. Such cooperation needs to become more intensive and systematic in the years to come, as BEREC gains bigger visibility among the European institutions, the industry, consumers and all sector stakeholders.
Let me conclude by stating that a vibrant Digital Single Market will require vision, determination, compromise, sacrifice and funding.
A coherent policy implies avoiding a piece-meal regulatory intervention but adopting a coordinated and holistic view of the major issues at stake.
To bridge both the investment gap and the digital divide in Europe, in addition to concrete regulatory and funding initiatives it is crucial to develop a digital mindset and a high degree of e-mobility. Here, education systems must play a crucial role.
The institutional design should include structural and economic components to align the incentives and actions of the national regulatory authorities with European policy making and the dynamic nature of global markets.
As markets are reaching maturity, they have to be deregulated in favor of flexibility and investment attraction. Respectively, wherever required, regulation should be extended and adjusted to provide security and trust for all stakeholders of the digital ecosystem.
BEREC is ready to support this transition by implementing measures which provide stability, predictability and long term perspective for the investors. At the same time BEREC remains flexible, senses the pulse of the market and constantly adapts to changing circumstances.
We, regulators, strive to make the upgraded networks available to all, at affordable prices, and to ensure affordable quality broadband access across Europe, always and everywhere, regardless of technology, network operator, service provider and geographical area.
Our vision comprises the adoption of a human-friendly technology that will become a useful tool for the citizen, enabling him to grow, get educated, work creatively and progress.
Thank you for your attention.
Speech by Dr Leonidas Kanellos
We are here to discuss the main regulatory challenges arising in Europe towards a Digital Single Market in telecoms. According to a EU Study 2012 on the cost on non-Europe, achieving a genuine single market could generate 0.9% GDP growth or 110 billion euro per year for the European economy. From a policy perspective, a single market would make a reality two fundamental principles of the European Treaty, first, the operators’ freedom to provide pan-European services and second, the citizens’ rights to consume digital content within a unified economic space.
During the first six months of my BEREC Presidency, I had the privilege of closely interacting with many of you by sharing views about the forces and weaknesses of the regulatory framework, the role of regulators and the state of the industry. In my view, we need to focus on two main sets of questions which will define the success of the Single Telecoms Market in Europe.