Initiatives to introduce new market definitions in the EC’s Electronics Communications Code would be a step backwards, says Manuel Kohnstamm, chief corporate affairs officer, Liberty Global.
With 5G technology and new applications fast approaching, the telecoms industry is poised for another moment of transformation – a moment that will further alter the way we live, work, play and communicate. Seizing this moment will require companies to invest in their networks, take a risk, and break new ground. It needs pioneers. But they, in turn, need the right climate of regulation to work in.
Some senior regulators understand that this is a moment to be nurtured. Ajit Pai, the new chairman of the FCC, has spoken passionately about the need to re-focus back on light touch regulation. His argument is for regulation that is practical, not ideological – that respects basic economics; that provides the freedom and certainty that businesses need to invest
Pai’s vision reinforces the kind of regulation we have enjoyed on the European continent for the last 20 years. It has been an era of radical change. Companies like Liberty Global have invested heavily in communications networks, digital television has blossomed, broadband has spread across Europe. We have seen a virtuous circle of investment, innovation, businesses doing well, consumers having more choice and society reaping the benefits.
All this has been underpinned by the right regulation. As we moved from telecoms networks being considered a public utility into a competitive market, regulators and governments have shifted their focus too. The main goal now is to prevent market failure through insufficient incentives and returns on investment. As Andrus Ansip, Vice President of the European Commission has said, investors “need long-term certainty and stability. No constant shifting of goalposts, or a changing regulatory environment. They also need strong incentives that reward their risk-taking.” For the cell towers to be built, the fibre to be laid and the capital expenditure to be committed to, the right incentives must be there.
We all have skin in this game. Consumers are empowered by innovation. Innovation is powered by investment. Investment is only possible when legislators and regulations provide businesses with a degree of certainty and the freedom to innovate.
That is why all consumers and all telecoms companies should be concerned about initiatives to include new market definitions in the new European Electronic Communications Code. These new definitions would undermine the core principles of a regime that has worked so well for so long. Currently, regulators have the tools to assess markets rigorously and intervene when there is a risk of dominance, or significant market power, and a consequent failing of consumers. With the new provisions, there would be the possibility of regulating operators even if significant market power were not defined and there would no market failure
This would be a step backwards in many ways. It would wreck the code’s objective to reduce sector-specific regulation where effective competition exists. It would open the door to much unnecessary and stifling regulation. Above all it would cast the fog of long-term uncertainty over the sector, dramatically reducing companies’ willingness to invest. We would see a chilling effect across the continent.
As major private investors in the infrastructure of our age, we at Liberty Global know the importance of long-term certainty. In the past years we have invested billions, building out new network, creating a network of 50million GIGAReady homes, with plans for millions more in the coming years. We share Europe’s desire for ubiquitous fibre-based networks fit for the GIGAWorld age. But this objective cannot be reached if competition takes a back-seat to new forms of regulation.
I strongly believe that we have to make a deliberate choice here. If we want to create optimal conditions for economic growth, facilitate investment and drive innovation, we must stick to the sound economic principles that have served Europe well for the past twenty years. Making the regulatory framework fit for the future means strengthening where it has been successful, modernising where necessary and reducing where possible. Re-regulating a sector that is already confronting many challenges – from demands for increasing bandwidth to intense competition from disruptive OTT players – by adding unnecessary tools is precisely the wrong step at the wrong time.
So I would urge those making these decisions to see the bigger picture. Yes, compromise across Member States and between the Institutions is part of any negotiation. But shifting the goalposts now would stifle growth at a time we need it. It would make it harder to realise the massive broadband deployment that Europe needs to be competitive in the global digital world.
Today, the vast majority of European consumers enjoy a choice of providers, offering a variety of services, at high speeds and competitive prices. In many ways our telecoms market is the envy of the world. It is a categorical success story – and we are on the cusp of something much greater. Let’s not lose the momentum and strive to be not only the biggest internal market in the world, but also the biggest digital market in the world.