European Plan to Boost Sagging Telecom Market Set for September

Europe needs to cut roaming charges and standardize the rules governing telecommunications networks to reinvigorate investment in the continent’s struggling market, Neelie Kroes said today.

The “Connected Continent” plan -- presented by Kroes, the European Union commissioner in charge of the digital agenda, to the European Parliament today -- will go before the other members of the EU’s administrative branch in early September.

Reduced costs to make calls outside of a customer’s home country and “net neutrality” guarantees, preventing carriers from blocking or slowing certain websites and services, will be the basis for protecting consumers across borders in the EU, she said.

“Uncertainties and costs faced by operators are passed on to consumers, meaning higher prices and poorer service,” Kroes said. “The fact is, the whole economy is relying on digital tools and networks.”

Kroes is looking for ways to boost a telecommunications market that’s fallen behind the U.S. and Asia in rolling out faster, fourth-generation wireless and which is struggling to make high-speed Internet available to customers. The EU accounts for 6 percent of the world’s 4G licenses while America, Korea and Japan have 88 percent, she said. Two percent of Europe’s homes have access to “superfast broadband,” she said.

The EU will also encourage investment from carriers by making licenses for wireless spectrum more consistent and by homogenizing processes for accessing networks across borders, she said.

‘Unblocking Bottlenecks’

Still, Kroes said she doesn’t intend to upend the more than two dozen local regulators that telecommunications providers face in Europe and plans to adapt current structures to “unblock the bottlenecks” and encourage the construction of faster networks. The European Commission has said it wants to give all Europeans access to Internet speeds of more than 30 megabits per second and that half the EU should have connections faster than 100 Mbps by 2020. The average downloading speed now is about 20 Mbps, the commission has said.

Operators are critical of this approach, saying the focus on regulating prices and access restricts their cash flows and cuts into funds for new networks and technology.

“The European industry is losing revenues and overall market capitalization is shrinking, in stark contrast with the U.S. and East Asia,” industry association ETNO said in a letter to the commission last month, signed by the chief executive officers of Orange SA (ORA), Deutsche Telekom AG (DTE), Telefonica SA, Telecom Italia SpA and others. “A new deregulatory approach is urgently required to ensure the long-term sustainability of the sector and its competitiveness at a global level.”

To contact the reporter on this story: Amy Thomson in London at athomson6@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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