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Prepare for a new Europe and a fair degree of carnage en route…

September 12, 2013

3 Min Read
Continental Shift

You've got to admire Neelie Kroes for her ambition. Europe's network operators might be despairing at her vision for the continent, given that it involves the abolition of one of their main sources of high-margin revenues (mobile roaming fees), but if her proposals become reality then Europe's communications market will certainly be a very different place within the next decade and should benefit the hundreds of millions of broadband (fixed and mobile) users who live in European Union (EU) member countries.

The first step towards that "Connected Continent" has now been taken, following the formal adoption of a number of proposals aimed at creating "a single market for telecoms." (See Euronews: Single Telecom Market Is Go!)

Kroes, the European Commissioner responsible for the Digital Agenda, has a vision for a single European market that will see the abolition of mobile roaming charges, consistent access to fixed broadband networks across all EU countries, new rules that promote public WiFi access and support fresh broadband network investments, and open access to Internet services and applications (ensuring that no one is blocked from using services such as Skype).

Her vision is outlined in this statement, while this Connected Continent website includes a great deal more information about the proposals and their potential impact.

Kroes is very focused, quite rightly, on the very important role that communications infrastructure and services play in Europe's economic prosperity -- she wants Europe to have the best possible networks and services to boost productivity, create jobs and attract investment. That's something all Europeans want, right?

Creating that single market and ensuring equal access to networks and applications is not going to be easy, of course, and there will be turmoil along the way. It's even possible that the implementation of the single market proposals could weaken Europe's digital standing in the world: In an email newsletter that describes Kroes's proposals as "a ticking bomb in the European telco market," industry analyst John Strand suggests that if "the whole proposal is implemented, it will have a negative effect on Europe and the telecommunications industry's willingness and ability to invest in the infrastructure the next 12-24 months, the very infrastructure that Ms. Kroes believes to be so vital for the digital single market."

The GSM Association (GSMA) , the industry body that represents mobile operators, is understandably muted in its response to the proposals. "The Commission has rightly identified that increased investment in Europe's telecoms infrastructure is needed to drive progress across all sectors of the economy but, on balance, the package needs to do much more to support this goal," noted GSMA Director General Anne Bouverot in this statement on the EC proposals.

Telcos are not great at adapting to change at the best of times and they are not going to be holding any parties to celebrate Kroes's proposals. Strand might be right: The operators might look at the potential loss of revenues from roaming and decide that their capex and opex budgets will need to take a hit to make up for the shortfall, resulting in a potential decrease in investments and job losses, two things that no one, including Kroes, wants to happen.

The operators may also look for ways to increase non-roaming charges to address the potential shortfalls. And they may decide their business plans don't make any sense in a single market and look for a way to exit the market.

I'm sure they will make their views known to Kroes and the EC hierarchy. Who knows, there may even be room for compromise, especially on timescales.

No one knows how this game will play out. At the very least we have to hope there will be some winners and that Kroes will be regarded as a people's champion who helped to regenerate Europe's economy and create a truly open, digital society. But even if that happens, I can't help but feel there might be some major communications casualties along the way.

— Ray Le Maistre, Editor-in-Chief, Light Reading

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