ETNO: Commission ‘cheerleader’ for NGNs

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The European Commission is playing the role of a “big cheerleader” for Next Generation Networks (NGNs), delaying their deployment while proposing cuts in mobile termination rates that are likely to severely affect the telecoms sector, Michael Bartholomew, director of the association which brings together the main European operators (ETNO), told EURACTIV in an interview.

Michael Bartholomew is the director of the European Telecommunications Network Operators’ Association (ETNO), a powerful association representing heavyweights of the European telecoms sector, including Deutsche Telekom, Telefonica, France Telecom and Telecom Italia.

To read a shortened version of this interview, please click here.

We have possibly entered the final phase of negotiations on the telecoms package. What’s your message to negotiators?

I met all the key players last week in Strasbourg. The package as it stands contains nothing of importance to our sector. 

For us, the key is the deployment of Next Generation Networks. However, while the European Parliament is doing an admirable job coming up with proposals, NGNs do not figure in any political agreement reached by the Council. We have yet to build NGNs in Europe, and this is becoming an urgent strategic priority. 

I urge all parties to understand this, so that we have certainty on how to deploy NGNs. We want a green light to build NGNs, and right now, we do not have it. If it will not be in the package, we should put off the discussions to a new Commission and a new Parliament.

What is your feedback from your meetings?

MEP Trautmann told me that the Parliament will not compromise on the issue of NGNs. They want it in the package. The Czech Presidency put it in the agenda. It is difficult to give estimations on the outcome. Right now, the institutions are far apart. 

Which measures do you ask in particular?

We are not asking for funding, but simply for rules that give regulatory certainty in which NGNs can thrive. We would like more targeted regulation. In rural areas there is no competition. Therefore, regulation should be different in the outlying areas from urban centres, where maybe it is not needed. 

That’s what we call geographical segmentation, and it has been understood by the Parliament and generally endorsed. Secondly, we are advocating risk-sharing, which means sharing the risk of building NGNs. The Commission is instead proposing a risk premium, in other words working into the price of access. It is not what we want. We are looking for pro-investment measures.

The Commission circulated a pro-investment measure recently: slashing mobile termination rates to increase investment in NGNs. What’s your opinion?

I really do not understand how such a measure – which will cost companies about €26 billion over the next five years, according to the Commission – is going to stimulate investment in NGNs at all. 

This is another kind of gobbledy-gook, a fantasy idea from the Commission. This is pure economic engineering. Mobile termination rates are already regulated. Prices have been going down over the years. NGNs have nothing to do with mobile termination fees. 

It is a very intrusive approach to a sector which is dynamic and innovative, a sort of crown jewel of Europe. But now the Commission is trying to regulate its goods, its services and its prices. It’s crazy and dangerous.

According to the Commission, NGNs would be better promoted via a recommendation than in the telecoms package. That’s why Brussels has put a draft recommendation under public consultation, and is set to present the final document in 2009. 

A recommendation is just that. It has no binding character. Moreover, as it stands now, the recommendation is severely flawed. 

The European Regulator Group has said the proposal is far too intrusive. It’s also very much behind schedule and it has no real weight. We are now discussing the telecoms package: rules that will govern the telecoms sector for the next five years. This is the right place to give regulatory certainty to NGN investments.

It seems the Commission wants always to play the big cheerleader for NGNs. I wonder why?

I could try to give an answer, which can also be a question for you. Maybe it’s because at the moment, we already have fibre networks deployed without being used in Europe. Outside the EU, in countries where there has been almost full coverage for years, such as Japan, penetration among households is still low. Basically, there is still a question that remains unanswered. Is there really a demand for services based on NGNs? Do we really need NGNs?

For me this is a shocking view, often expressed by someone in the Commission, and I ask myself: perhaps we have not done a good job in explaining why NGNs are absolutely critical for many industries in Europe, and particularly relevant in this economic crisis. 

NGNs will likely result in an explosion of new services. But we do not know what the take-up or the demand will be. That is what makes them so risky. It is true. In Japan, the potential capacity has not being used properly, in part because the government threw masses of money [around] long before the services were available to public. We already have services ready to deploy. It is a different scenario from Japan.

However, not many new services have been delivered exclusively through fibre so far. Copper can still do the job. Do NGNs have genuine added value?

Many services have developed and need NGNs to further develop: E-learning, e-health and e-government. The content industry can exploit new forms of distribution for European content. Young generations can continue gaming. All this needs bandwidth. All this creates new jobs. There is overwhelming evidence that NGNs are the future and we need them now. Questioning this would be shortsighted. It is like when we were questioning whether we needed motorised transport.

So, we can assume that the current copper-based network is not guaranteed to support the increase in traffic.

Actually it could, but the current copper networks, however, are coming to the end of their lives. There are many attempts to extend their lives. But NGNs are a quantum leap. Every government recognises that we need NGNs. The only scepticism I have heard comes from certain members of the European Commission, from the cabinets, not from services. It is a political issue.

Indeed, could NGNs widen the digital divide?

I do not believe that. With NGNs, it is much cheaper to reach rural areas. It is not economically interesting to extend the current copper lines to remote areas. NGNs are therefore critical to fighting the digital divide.

Changing the subject, in Brussels and in national capitals, new measures to protect online copyright are being proposed. Is this a positive trend?

We recognise that it is important to address the problem of piracy and to promote legal offers as much as we can. We are very committed, but we cannot accept an approach like a gradual response. We don’t want to become policemen of the Net. 

We do not want to start monitoring what our customers do on the Net. We realise that illegal peer-peer is still very prevalent. But going after young people and suing them, as it happened in the US, isn’t an action that we judge appropriate. We need more education and it will take time. It’s not something you reach overnight. The telecoms package is not the right place to deal with copyright protection. But now there are rumours that the issue could be addressed in the e-commerce review.

What is your main concern about such attempts to enforce online copyright protection? Lower Internet traffic or more costs for Internet services providers?

We don’t fear less traffic. We want NGNs because we foresee a growth in connections. Our concerns have nothing to do with costs, either. It is an issue of liability and data protection. We have to balance data protection with retention. Piracy creates a lot of costs for us in any case. We make money out of legitimate sites, not out of illegitimate ones. The question of piracy remains a very important issue. But there are different views between the content industry and us on how to combat it. We changed our business model. They should do the same.

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