Juncker's Broadband Plans Get Junk Rating
European Commission authorities are easy targets for reporters, and Light Reading has taken its fair share of potshots at figures like Magrethe Vestager (competition commissioner) and Jean-Claude Juncker (president). (See Juncker Hooks Up With Village People and Calling Europe's Broadband Bluff.)
But the European Commission 's latest set of telecom proposals, unveiled earlier this week, was like a red rag to a bull. No sane individual can possibly take them seriously.
Let's recap. Broadly speaking, there are three main targets that politicians want to realize by 2025: ensure all major public institutions in the European Union can access a 1Gbit/s broadband service, guarantee 100Mbit/s connectivity for all households in the region (no joke) and blanket all urban areas with "uninterrupted" 5G coverage.
These are hugely ambitious goals that will cost about €500 billion ($558 billion) in investment over the next eight or nine years, by the EC's reckoning. Unfortunately, on the basis of current investment trends (which may themselves be optimistic), Europe is facing a €155 billion ($173 billion) shortfall.
Juncker's much-derided plan -- in a nutshell -- is to be much nicer to the region's telecom titans in the hope they will stump up the difference. "Investors need long-term certainty," says the EC, which has fueled long-term uncertainty for years. Buddy up with a rival on a high-speed network project, and the regulatory straitjacket might come off -- a bit, at least, and especially if you're doing wholesale-only stuff.
That's the gist of it, and in some respects it is a step forward. Deutsche Telekom AG (NYSE: DT) in Germany, for example, has been unprepared to invest in gigabit-speed infrastructure that it would have to "open" to competitors on unfavorable terms. (See Can DT, Regulators Find Common FTTH Ground?)
But besides lacking much real detail, the EC's missive is hardly blue-sky thinking. One suspects it would encourage partnerships in specific municipalities (which have been happening anyway). It seems unlikely to unite bitter enemies like BT Group plc (NYSE: BT; London: BTA) and Sky , the UK's two largest broadband retailers, on a nationwide fiber-to-the-home rollout.
It also looks totally out of kilter with EC philosophy. For years, the overriding concern regarding telecom markets has been competition, and the need to foster it. Vestager has slapped down any merger activity unless designed to bring new players into a national market. Investors have been denied full control of the high-speed networks they build.
All of sudden, infrastructure tie-ups are in vogue and over-regulation is a bad thing. None of this will sound very positive to the small broadband retailers that depend on low-cost access to incumbents' networks, and have already complained about the dominance of the market leaders.
Anticipating the backlash, the EC has published a "frequently asked questions" web page, sincerely positing the question: "Will such rules lead to less competition?"
Of course not, it answers. "Operators with significant market power will continue to be obliged to provide access to their networks to other operators, where this is necessary for retail competition and where commercial wholesale access is not offered on reasonable terms," it writes.
In other words, there might be some relaxation of the rules for broadband investors. But there might not.
"What about more far-reaching reforms?" would be a more pertinent question. While "structural separation" might not be the perfect solution, it surely merits attention? Even the UK's Ofcom -- hardly known for its radicalism -- gave some consideration to the idea of separating BT's network business from its customer-facing arms during a recent strategic review of the telecom sector. Yet to the EC, structural separation seems to be a taboo subject. (See BT, Ofcom & the Battle of Britain.)
As for the plans related to 5G, talk of extending frequency licenses and coordinating spectrum awards between European Union member states is laudable. Suggesting 5G will blanket all urban areas by 2025 is laughable. Even now, about seven years after 4G was first launched in Europe, your correspondent struggles to get a 4G phone signal in parts of London.
As anyone in the industry knows, 5G will not see commercial deployment until 2020 at the earliest. But when it comes to really high-speed services, equipment makers are likely to focus their initial efforts on the 28GHz band, which operators in Japan, South Korea and the US expect to use. Elsewhere, those airwaves look strictly off-limits, presenting Europe with another connectivity hurdle. (See Spectrum Hurdle Could Trip Europe in 5G Race.)
"Europe wants to be the leader in 5G and the truth is that's probably not realistic," says Amit Nagpal, a partner at spectrum advisory group Aetha Consulting. "Asia and North America are too far ahead."
The same might be said of the broadband situation generally.
— Iain Morris, , News Editor, Light Reading