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Telecom Sector 'Its Own Worst Enemy' – Kroes

Given her track record, Neelie Kroes, the European Commission's vice president for the Digital Agenda, and scourge of Europe's mobile operators, was never going to step down from her post quietly.

And she didn't.

Having had responsibility for the Europe's "digital economy," including regional telecom and online regulations, since early 2010, Kroes has implemented a series of regulations and made numerous decisions that have directly affected the business, operations and strategies of communications service providers, mostly notably the reduction of mobile data roaming charges, announcements on net neutrality and marketing transparency, and her quest to introduce a single telecom services market. (See Eurobites: Red-Letter Day for Roaming Charges, Continental Shift, EC Nixes Pure Net Neutrality and Reding Replaced as Europe's Telecom Watchdog.)

Neelie Kroes: Going out with a bang, not a whimper.
Neelie Kroes: Going out with a bang, not a whimper.

Now a new set of commissioners are rotated in for a new "term" at the European Commission, Kroes bid the telecom sector farewell on Wednesday, and did so with a verbal kick to the collective cojones of Europe's telcos.

She attended a conference organized by European Telecommunications Network Operators' Association (ETNO) , the industry association that represents the region's major telcos, and witnessed the unveiling of ETNO's "Agenda for Europe," which calls for an "ambitious reform of current policy." (See ETNO Unveils 'Agenda For Europe'.)

For more coverage of the strategic pressures and opportunities facing operators and vendors in the communications market, see our business transformation content channel here on Light Reading.

Then Kroes took to the stage and fired thunderbolts into the crowd, starting her speech -- "Adapt or die: What I would do if I ran a telecom company" -- by noting that "sometimes I think the telecoms sector is its own worst enemy," before adding that the telecom sector's representatives in the room were "probably all looking forward to the very near future ... when you won't have to put up with me anymore."

Cue uncomfortable shuffling in seats...

She told the telcos that they "have to change" and be ready for a world set to be dominated by the cloud, the Internet of Things (IoT), big data and 5G. "What is the telecoms sector's relationship to that digital future?" she asked. "Will you be leading us there? Or will you be dragged along behind, against your will, resisting until the last?"

And while the telcos were still smarting at that virtual dig in the ribs, Kroes proceeded to tell them "how I'd steer a telco through dynamic digital developments."

So, what did she have to say? It's worth reading her speech, even though she didn't actually tell the telcos exactly what she would do if she was running a Deutsche Telekom AG (NYSE: DT) or Vodafone Group plc (NYSE: VOD).

Read the Kroes speech in full on the next page.

Next page: The Kroes speech in full.

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

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nasimson 10/14/2014 | 11:04:39 PM
the much needed reforms. She's my Telecom hero. She'll be missed. Kind of services she rendered in her tenure made her role more than substantial. She brought the much needed reforms. I dont care about the complaints of the telecoms as long as the average European has better services delivered more cost-effectively.
mendyk 10/3/2014 | 10:44:51 AM
Re: Some of my favorites from the Kroes speech This is kind of where it's easy to lose track of Ms. Kroes' train of thought. She seems to resent that network operators behave as though they operate in a regulated environment, as though that's solely the fault of the operators. The fact that her position exists within the context of an uber-government adds a nice touch of irony.
Gabriel Brown 10/3/2014 | 10:29:42 AM
Re: Some of my favorites from the Kroes speech Both, without doubt.

As with everything involving the European Super State, the history is complicated.

When Vodafone acquired Mannesman (the deal that catapulted it into the proper big league), one of the regulatory conditions is that it wouldn't do euro-wide services because that would be anti-competitive. How quaint that now seems.
mendyk 10/3/2014 | 9:48:59 AM
Re: Some of my favorites from the Kroes speech Would you attribute the more user-friendly pricing to policymakers or the Invisible Hand?
Gabriel Brown 10/3/2014 | 9:34:25 AM
Re: Some of my favorites from the Kroes speech No, the bill has come down dramatically. Vodafone now offers roam-like-home for £2 a day in Europe. Other operators have started to do the same.

But to your point on usage, consumption of services while abroad, but within Europe, is much lower than at home*. This is a market failure. 

You can argue how serious this is because, yes, mobile use is VERY localized. 

* I don't actually have the evidence to hand, but I'm pretty sure that is the case.
mendyk 10/3/2014 | 8:40:14 AM
Re: Some of my favorites from the Kroes speech Gabriel -- was your last MWC phone bill also that high? As far as US service goes, cost and effectiveness are a function of coverage, which is why Verizon and AT&T are well ahead of Sprint, T-Mobile, et al. But I'm guessing that 90% of all mobile usage is localized. Mobile use in Europe doesn't lag the US or other markets -- if it did, then it would be easier to understand the handwringing.
Gabriel Brown 10/3/2014 | 8:29:55 AM
Re: Some of my favorites from the Kroes speech The U.S. now has what is close to a single telecom market. Is it dramatically "better" (whatever that means) than what's going on in Europe?

Correct me if I'm wrong, but in America your mobile phone works equally in New York as it does in Los Angeles. You don't pay extra to make a call within the US market. 

In Europe it doesn't work like that. If I go to Paris or Amsterdam -- both very close to London for a day's business; much nearer than LA is to NY -- I pay an extra fee calculated by some mysterious formula.

A few years ago my roaming bill from attending MWC in Barcelona was greater than the cost of my return flight. This type of scenario is illogical.  

Things have got better on that front over the last few years. Thanks in some part to European regulation. (Although you could argue European regulation has slowed the emergence of a single market as well).

On the other hand, it seems like mobile service within the UK is substantially cheaper than the US because of market competition.
Mitch Wagner 10/2/2014 | 4:29:45 PM
Re: Some of my favorites from the Kroes speech "It's all very well to talk about deregulation, but not if that's a code-word for keeping protected national markets."

That sometimes appear to be the way American telcos want things: The benefits of a protected monopoly without the regulation that goes with it. Or, to put it another way, the benefit of free market without the competition that goes with it. 
Yulot 10/2/2014 | 10:18:36 AM
Re: Some of my favorites from the Kroes speech I agree.

She is stressing some good high level points - though I am getting annoyed at her ego centric speech - but the world is not totally black or white. European Telcos have really struggled for money for a long time. ARPU is way lower than in the States and the only way they have managed to show some profit is by downsizing their workforce every 6 months. In addition, you have to deal with small fragmanted markets, with huge competition, low and dropping ARPU and still high investment requirements to run legacy and plan the future.

So she can sit on them giving them the lesson that they are being negative and not embracing the future, but it is easier to (re-)invest when you earn money in the first place or can easily prove you will earn lots in the next 6 to 12 months, than when you have to scratch your head to figure out how you will not loose it.

But to come back to your point on stealth, yes, I believe so.
mendyk 10/2/2014 | 9:25:43 AM
Re: Some of my favorites from the Kroes speech The U.S. now has what is close to a single telecom market. Is it dramatically "better" (whatever that means) than what's going on in Europe?
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