On February 21st, the European Commission presented the White Paper “How to master Europe’s digital infrastructure needs?” which analyses the telecoms sector and its ability to meet the connectivity targets set by the Commission for the Digital Decade 2030. The White Paper sets out a number of proposals or scenarios to address challenges identified and facilitate the achievement of these targets.
The White Paper (WP) has been welcomed with as well as the opportunity to provide comments and alternatives to the Commission’s proposal. The WP, which identifies digital networks as a fundamental pillar of the EU’s competitiveness, recognises the challenges facing the telecoms sector and rightly considers extending the objectives of the regulatory framework beyond the protection of end-users and the promotion of competition, to additionally include industrial competitiveness, economic security and sustainability. However, we believe the roadmap presented by the WP is vague in the absence of precise proposals and a timetable for implementation.
In the context of the new political cycle that we are now entering in the European Union, the next 12 months will be crucial for the future of the region. Consequently, and fully agreeing with the analysis of the situation of the sector presented by the WP, we urge the European Commission (EC) to elaborate a legislative proposal, a Digital Networks Act (DNA), that is effective in the shortest possible time, and that effectively addresses the identified challenges. This DNA will be the instrument that defines the policy and regulatory framework for the sector for the next decade, and should therefore lay the foundations for a new simplified framework that eliminates regulatory restrictions and reduces operational and administrative costs for network operators, with the objective of achieving a true European Single Market and globally competitive electronic communications market.
The following proposals should be able to structure the backbone of the DNA.
Creating investment-friendly market structures
Scale at the local level is urgent and critical for EU telecom operators to be sustainable and profitable and to attract private investment. Operators get a return on investment when there are more customers on locally deployed infrastructure. Scale in the market will also bring significant benefits to consumer welfare and foster sustainable network operators able to invest in the most advanced, secure and resilient networks.
The revision of the EU Merger Regulation is key to responding to new market realities and challenges.
Rebalancing the digital ecosystem: Introduce a fair negotiation obligation and a dispute resolution mechanism for cases where agreement is not possible
The EC should establish a dispute resolution mechanism in cases where commercial negotiations fail, to ensure that large content and application providers (CSPs) agree with network operators or ISPs on fair and adequate technical and economic terms and conditions for the IP data transport service that ISPs provide to CSPs.
Promoting innovative digital services in the European Union
Abolish the current Significant Market Power regime, remove ex-ante obligations and move to an ex-post model based on competition law and symmetrical regulation of access to passive infrastructure (GIA). Where there is no competition, ex-ante measures could be imposed through an active wholesale product.
Symmetric ex-ante regulation (e.g. cost-oriented tariffs in MTR/FTR and roaming) should be reconsidered as it stifles competition and investment.
Make spectrum policy a lever to promote investment and growth
The Commission should harmonise spectrum policy in the European Union along three lines of action: i) to provide higher expectations and certainty for the renewal of existing rights; ii) to prevent future spectrum scarcity in the low and mid bands by allocating such spectrum on the basis of rigorous and transparent socio-economic cost-benefit analyses; and iii) to ensure that future allocations do not lead to inefficient outcomes or disproportionate prices and conditions.
Including digital networks in the EU’s taxonomy of sustainable activities
Digital networks should be included in the next Delegated Act on climate foreseen for 2025 as a new taxonomic activity to facilitate the financing of investment in sustainable new generation grids.
In short, Europe’s competitiveness depends on having a solid, sustainable and profitable telecommunications sector capable of undertaking the investments required to deploy the digital infrastructures set to support its economic and social activity. Meeting the 2030 connectivity targets of the Digital Decade are a priority for the EU’s economic and strategic autonomy, which makes it essential and urgent to adopt a Digital Networks Act and define a new regulatory policy framework for the next decade. Europe and the new Commission have no time to lose. Tomorrow will be too late; it is now or never.
In the next post we will take a closer look at how to promote investment-friendly market structures.
