SPECIAL REPORT / Europe's Commissioner for the digital agenda, Neelie Kroes, called yesterday (26 February) for a true single market in telecommunications to overcome sluggish spectrum sales by EU member states and to prevent governments pocketing the cash proceeds. EurActiv reports from the GSMA conference in Barcelona.
In a speech to Barcelona’s Global Mobile Congress – the world’s largest telecoms sector conference – Kroes said the 27 EU states needed to align their approach on mobile spectrum and fibre broadband, creating a genuine single market.
Speaking to journalists afterwards, Kroes described Europe’s poor efforts to release broadband spectrum as resembling “a bowl of spaghetti”, adding that countries risked an "ACTA-times-ten" backlash.
Kroes was referring to the controversial Anti-Counterfeiting Trade Agreement, which met with strong public opposition.
Unallocated broadband spectrum is ‘inexcusable’
The EU has authorised 1,200 megahertz of spectrum for wireless broadband, but on average European member states have only granted 65% of it.
Kroes described this as an “inexcusable waste” and said that the Commission was prepared to use treaty powers to bring actions for infringement against member states dragging their feet. She also condemned EU governments for auctioning broadband spectrum without any intention of spending the proceeds of such auctions on digital services.
Kroes said that Europe was “shooting itself in the foot”, since spectrum revenues were needed to invest in 5th generation broadband networks.
Governments failing to invest spectrum proceeds properly cause networks to deteriorate they "will face defeat at the ballot box" as a result, Kroes said, adding: “The opposition will be like ACTA times ten if they do not do this.”
Spectrum is politically sensitive
Kroes's call for a single market will be most politically sensitive insofar as it suggests a single regulator could replace the national authorities, which jealously guard their right to preserve spectrum as a sovereign asset, often for defence and security purposes.
Kroes has not publicly called for the creation of a single regulator, but she told journalists that it was possible that in the future the EU could be solely responsible for auctioning European spectrum.
France, Germany and Britain are known to oppose ceding power to Brussels on telecommunications regulation, especially if it means losing control of spectrum auctions that bring billions into public coffers.
Need for consolidation in telecommunications market
The industry broadly welcomed Kroes’ announcement. "We back in principle the idea to have a much more integrated European telecoms market but we see a real need to have a real consolidation because there are too many markets and too many players," said Luigi Gambardella, the chairman of the European Telecommunications Network Operators' Association (ETNO), which represents 37 companies.
Europe has about 100 mobile operators, set against six in the United States and three in China, making for a much more fragmented market. European companies have also been struggling to pay off debts and build 4G and fibre broadband.
Consolidation to reduce the number of mobile operators has been viewed with suspicion by antitrust regulators in Brussels over fears that it leads to higher prices. Gambardella said he believed they now understood that a more consolidated market would be vital for a genuine single market.
“The truly European single market would certainly facilitate the economies of scale that a healthy market more and more requires. As an example, the European 800MHz band support on terminal side is encountering issues which did not exists for the 700MHz band in the USA: this is related to the fact that the USA citizens can actually rely on a stronger single market,” according to Alessandro Casagni, the head of European wireless regulatory policy with tech company Huawei.
“The recent 800MHz auctions in Europe have drained financial resources out of the telecommunications sector in a moment in which public funds at European and national levels are being reduced,” Casagni said.
“While Huawei strives to provide cutting edge technologies enabling unprecedented exploitation of the scarce spectrum resource (such as advanced antenna systems, Small Cells and Heterogeneous Networks), innovation alone cannot cope with the ongoing traffic increase. New bands need to be made available to meet the European Union Radio Spectrum Policy Programme objective of 1200MHz for Wireless Broadband by 2015, the WRC-15 will be a great opportunity to enable the availability of additional 500MHz gradually, within 2020,” Casagni concluded.
As new digital technology replaces traditional analogue to meet the 2012 European deadline for the so-called digital switchover, the same services can be provided with less spectrum, opening up new opportunities for other operators.
The digital dividend - spectrum that is freed as a result of the switchover - has been hailed in Brussels as a way to boost growth in a highly profitable digital market and bring broadband to remote areas that may not have terrestrial networks.
The European Commission proposed to allocate the 790-862 MHz sub-band to telecoms operators to allow them to exploit the digital dividend. The 800 MHz band ranks among the most valuable freed frequencies, since it travels long distances and through buildings.
In November 2009, the European Parliament and the Council agreed to modify EU telecoms rules and called on the European Commission to propose a multi-annual Radio Spectrum Policy Programme.
The objective of the programme is to "set out the policy orientations and objectives for the strategic planning and harmonisation of the use of radio spectrum."