Méabh McMahon reports from Tuesday’s European Competition Forum – an annual European Commission-staged meeting of senior policy makers and business executives – in Brussels.
The European Union (EU) should be securing complete deregulation in EU markets that are already competitive, the new CEO of Deutsche Telekom Tim Höttges said.
As negotiations on EU digital agenda Commissioner Neelie Kroes' telecoms Connected Continent package continue, Höttges reminded EU lawmakers to recall the impact of regulated price cuts on the European telecoms sector in times of financial crisis.
Höttges explained that he did not see a clear way for a competitive EU market able to attract and leverage investment efficiently.
“One of my professors once said that ambiguity is a bad thing”, Höttges told the room of telecommunication experts, “and this industry is full of ambiguity.”
Highlighting the difficulty of on one hand, being asked to create entrepreneurship within his industry, and on the other, being asked to help reduce the indebtedness of governments, Höttges added: "People ask for a single market, but local regulators have their own spectrum auctions to reduce indebtedness of national budgets. We are asked to lower consumer prices, but at the same time are asked to invest in infrastructure.”
One of the CEO’s biggest concerns is the lack of European companies in the ICT playing field: “Intel, Toshiba, Cisco, Huawei – not a single company is European”, he said. From computer hardware to the development of handsets, there is “not a single player left in Europe”, he lamented.
Höttges believes is too hard in Europe to please local regulators and governments while competing globally, and said he thought Europe is currently strong only in software and infrastructure - and “even here, we are falling behind”.
He went on: “Imagine someone knocking on the door of Google and asking them to pay up,” implying that US companies would never entertain such regulation.
“In this environment, where we are heavily regulated in 28 markets, it is not easy to standardise chip sets, handsets, optimise procurements and find new ways to monetise data and environment. [And] while the US is increasing its revenue by 30 percent, our industry is shrinking by 10 percent”, he concluded.
Yet, the European Commission is constantly referring to the potential for growth in the telecoms and digital sector. Speaking earlier in the day, the EU Competition Commissioner Joaquín Almunia stressed the need for an integrated market in Europe where operators would offer pan-European services.
“Europe’s telecoms markets remain fragmented”, he insisted. “Cross-border barriers in this market are of a regulatory nature. It is mainly the task of national governments, the EU Council [of Minsters] and the European Parliament to remove them once and for all”.
For the French Socialist Catherine Trautmann - the MEP responsible for negotiating the telecom package in the European Parliament – initial reactions to the telecoms proposal were bad: “Many saw this proposal as a "backdoor review", and a rather clumsy one at that”, she said.
Trautmann’s biggest concern is competition coming from outside Europe. “As much as we should welcome investments from outside the EU, since telecom networks are so strategic, we should prevent a large-scale entry of US companies on our market (now that it is deemed ‘interesting’ again by financial analysts)”, she said.
“A smartphone without a network is only but a glorified watch. I'm concerned sometimes to even hear high-level representatives of telecom companies speak in that kind of defeatist way.”
For Massimo Motta, the Commission’s chief competition economist, the EU is seriously lagging behind – especially in the area of investments in 4G LTE. He insisted that competition could be the only driver for the necessary investments.