Proximus, Mobistar and BASE have hit out against a new local tax in what is a harbinger of operators’ worst fears regarding the new Digital Single Market reform currently passing through the EU.
The three Belgian operators said they learned of a new tax on mobile telephony infrastructure in the Brussels region through the media this week.
The local government is proposing to boost its coffers by up to €20 million a year, the three companies claimed, which would represent almost 30 percent of their annual investments.
Proximus, Mobistar and BASE said they invested up to €65 million in 2014 to develop their mobile telephony infrastructure.
In an emotive press release, the operators talked of Brussels becoming “a hornet’s nest” and the government needing to understand that “it can't have its cake and eat it too”.
Dominique Leroy, Jean-Marc Harion, and Jos Donvil, the CEOs of the three telcos, said: “Such a tax would not penalise the product of an economic activity but rather the investment at the very source of that activity.
“It would directly interfere with mobile communication, one of the building blocks of all economic, touristic and social activity in the capital of Europe.
“We therefore call on the Brussels government to act in a way that is truly in line with the priorities they announced, and, rather than creating new taxes, to build a favorable context for innovation and for the emergence of new technologies."
While this is something of a local dispute, Proximus CEO Leroy was also a signatory of a letter sent this week from Europe’s biggest operators to the European Council.
The body is due to meet next week where it is expected to discuss the DSM, which includes reform relating to the harmonised management of spectrum, incentives to invest in high-speed broadband, and the creation of a more level playing field between telcos and online players.
In the letter, the Chief Executives called on the Council to “express support for a pro-investment policy approach that translates into fast and concrete actions”.
The DSM was unveiled last month; although precise details were notable by their absence, telcos broadly welcomed the reform.
This week saw ministers in the Justice Council seal a general approach on Data Protection Regulation, which is also part of the DSM.
The ruling means a single set of rules will be adopted across the EU, the right to be forgotten will be reinforced and a right to data portability will make it easier for users to transfer personal data between service providers.
However, operators are worried by recent comments from EU competition commissioner Margrethe Vestager.
In a speech this week she said there was "ample evidence" that consolidation pushes up prices and is not required to boost investment.
Georg Serentschy, a competition and regulation expert at management consultancy Arthur D Little, told European Communications that Vestager was not correct to claim consolidation leads to pricier bills.
He said: “[There] is a kind of Babylonian confusion about the notion of ‘price’ which from an economic standpoint means ‘price per unit’ (voice minute, text message or MB).
“However this is often mixed up with the monthly bill (ARPU) of a customer which is roughly ‘price x consumed volume’.
“What we can observe in many cases is that ARPU goes up, the unit price goes down and the user consumes more volume.”
On the M&A front, Serentschy said it was a question of balance: “Operating a telecom network is a fixed-cost driven business and scale matters enormously to be strong enough for investing.... [but] without competition in place, network operators have no incentive to invest.
“For regulators and competition watchdogs it is all about striking the right balance between maintaining sufficient competition in a given market and allowing consolidation to the extent that healthy margins can be earned by the operator to enable investments.”
Operators will hope that the right balance does prevail, but this week will have tested their nerve.