The European Commission has tabled a new
package of proposed legislative measures governing the EU telecoms
market. The proposals are designed to speed up the arrival of 4 and 5G,
get rid of roaming charges, and guarantee Internet neutrality.
The European telecoms market is too fragmented: this is the unambiguous view of
Neelie Kroes,
Vice-President of the European Commission and EU Commissioner for the
Digital Agenda. With over 120 telecoms operators in the European Union,
the region comes off badly from a direct comparison with the United
States, where major providers such as
T-Online and
Verizon Wireless
have succeeded in virtually dominating the market. With Microsoft’s
recent acquisition of Finnish manufacturer’s Nokia's device and services
division the issue of an EU telecoms strategy has again come to the
fore. Accordingly, the Commission has now proposed an EU Regulation
designed to create a harmonised European market, but what does that mean
exactly? While the legislative provisions certainly seem to offer
substantial benefits to the consumer, they nevertheless run the risk of
undermining the business structure of some telecoms operators.
Transparent Internet speed and quality; network access everywhere in Europe
One of the key issues the Commission has set out to tackle is roaming
charges. The term ‘roaming’ refers to how phone and Internet users are
able to use their devices to link up with destinations outside their own
country, going via third-party networks which have agreements with
their own local network provider. However, these connections and calls –
whether incoming or outgoing – are more expensive than those sent or
received within the national area, and the Commission wants to see an
end to these extra charges from 1 July 2014. The idea is that consumers
will have a free choice of foreign operator, while operators will be
able to offer pricing packages for usage throughout Europe. As regards
neutrality of the Internet, operators would no longer be able to block
traffic; they would only be able to offer a choice of connection speeds.
Vincent Grison, a Partner at Paris-based telecoms, media and digital strategy firm
Kalane Consulting,
describes the potential impact of these measures: “Abolishing roaming
charges for calls received from abroad is clearly an advantage for the
consumer, but this will be damaging to operators whose turnover and
margins are already under pressure. Moreover, the option of offering a
range of tariffs on the basis of Internet access service quality could
actually constitute a breach of Net neutrality and risk creating a
‘two-speed’ Internet where access will depend on the financial means
available to content providers and consumers.”
What impact on innovation?
By opening up the 4G and then 5G market in Europe, the new Regulation
should enable more widespread connectivity for people across Europe,
especially – as Vincent Grison points out – in countries where networks
have not been deployed on a national scale. The new legislation could be
a particularly useful tool to help market penetration of wearable
devices, a field where we have already seen the potential of the smart
watch, by speeding up the rollout of networks of connected objects.
However it will primarily be the Commission’s implicit goal of
encouraging consolidation among European telecoms operators that is
likely to help speed up innovation. By trimming deployment costs and
drawing on economies of scale, larger groupings would be in a position
to reinvest in network development, as the major US operators have done.
The Commission unveiled and forwarded the ‘Connected Continent’
Regulation proposal to the joint legislators at the Council of Ministers
and European Parliament on 11 September. This is one of the most
far-reaching attempts ever to overhaul the European telecoms market and
it will effectively change the relationship between user and network
operator. But perhaps the most important aspect of all will be the push
to create a strong basis on which to promote innovation. The telecoms
market currently accounts for just 9% of European Union GDP and is thus
very far from reaching its true economic potential.
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