news


Europe wary of telecoms mergers, fails to decide on roaming rules

DSM pillars

The European super-bureaucracy is adopting an increasingly antagonistic stance towards the continent’s telecoms players, suggesting an opposition to consolidation and once more failing to offer clarity on roaming.

Margrethe Vestager, the European Union Competition Commissioner, speaking on the topic of Euro competition policy in general, Vestager specifically identified the Telecoms sector as one in which she fears consolidation could harm competition and investment.

Revealing the interventionist instincts hard-wired into the EU, Vestager set the scene by quoting state intervention guru John Maynard Keynes: “The important thing for government is not to do things which individuals are doing already, and to do them a little better or a little worse; but to do those things which at present are not done at all.”

Hard to argue with that, but Vestager then lamented the tendency of the private sector deviate from the correct path. “But Europe cannot rely on public funding alone,” she said. “We need to make sure that firms invest in our future. And when do firms invest? Above all, they invest in order to out compete their rivals.”

Which brought her onto the errant telecoms sector. “Incumbent operators argue that if they cannot merge with their rivals in the same country they will be unable to increase their investment,” said Vestager. “I’ve heard this claim quite often, but I have not seen evidence that this is the case. Instead, there is ample evidence that excessive consolidation may lead not only to less competition and more expensive bills for consumers, but that it also reduces the incentives in national markets to innovate.

“In fact, infrastructure investment can be stimulated by competition. In 2009 a new player, Free Mobile, entered the French telecoms market. Following that entry, the overall level of telecoms investment in France grew, and remains at higher levels than at the moment of Free’s entry.

In these markets, we have also seen established players abuse their dominant positions to try and prevent competition from alternative operators. And we shouldn’t forget that these alternative operators are also behind major network investments in the EU.”

Meanwhile the European Council on Transport, Telecommunications and Energy met once more to try to thrash out an agreement on new rules regarding roaming and net neutrality, and once more failed. Back in March a bunch of MEPs wrote to the Council, urging it to show restraint over its plans to eradicate roaming charges within the continent. Laudably, the Council resolved to reassess the plans, but is now struggling to come to an agreement.

“The longer it will take to agree on roaming and open internet rules, the more distant the future of a true digital single market is,” said Anrijs Matiss, Latvian Minister for Transport. “Now is the time for the parliament to show its commitment to close this file because, once again, in the council we reaffirmed that we are ready for the compromises and we are ready for the real opening of the telecoms market in the European Union.”

All this stuff comes under the general heading of Digital Single Market for the EU – an assumption that lowering the barriers to cross-border digital communication and trade will make the continent more competitive, but also bring everyone closer together, with is the ultimate mission statement of the EU.

Vestager and Matiss both make good and valid points about competition and red-tape, but also run the risk of being obstructive to the telecoms sector they both concede is so important. These are certainly important decisions, and it’s important to get them right, but the decisions also been to be made in a timely manner to avoid harming investment through uncertainty.


3 comments

  1. Professor Peter Curwen 15/06/2015 @ 3:29 pm

    This issue can never be fully resolved because we can only gather hard evidence with a given structure and merely hypothesise what it would have been with a different one. But the Commission is being evasive in claiming that the evidence in France ‘proves’ that adding another operator is good for consumers. A critical factor is whether a new entrant has a well funded parent such as Hutchison Whampoa or Altice. A very recent comprehensive study by myself (Professor Peter Curwen) and my colleague (Professor Jason Whalley) in the journal “info” does not lend support for the Commission’s position – far from it. In any event, the Commission cannot enforce new entry nor prevent operators from withdrawing from a market – the nuclear option. And how come there are only four national operators in the USA with two much larger than the others? Oh, I get it, the FCC are pussycats where consolidation is the issue.

  2. Scott Bicheno Scott Bicheno 15/06/2015 @ 3:40 pm

    Good points. The matter of the ideal number of operators is contentious and hard to conclude definitively. Also there is now competition between national and supra-national regulators – presumably that also benefits the consumer…

  3. Dom OConnell 16/06/2015 @ 11:33 am

    Surely all regulation is detrimental to technological enhancement (obviously a key-component within telecommunications?

    Ultimately a Digital Single Market is the only outcome as the world becomes more accessible than ever. Any further news on Angie’s involvement in the UK and mainland Europe?

Leave a comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Polls

How have open source groups influenced the development of virtualization in telecoms?

Loading ... Loading ...