It may be hard to believe, but once upon a time, Europe was the global benchmark in telecoms.
European carriers were the first adopters of the latest 3G technology, European vendors were the innovative mobile phone visionaries and the continent's networks were faster than anywhere else in the world.
Fast-forward to 2013 and analysts paint a very different picture. Investors, too, will tell you that growth in the European market is lagging behind anywhere where one can access a fibre-optic cable or a copper pipe.
It is the Americans that are rolling out 4G LTE networks in earnest, the Koreans that have the fastest speeds and the Latin Americans that have most money to invest.
Europe is falling behind as a technology epicentre, and digital commissioner Neelie Kroes' plan to create a single European market has generated widespread debate.
"It is time to act," says Kroes. "In fact, it is already overdue. The single market boost can revive European telecoms and help our whole economy; but we must move fast."
Uniting or dividing?
Operators are at odds with the proposals. Industry bodies, including the GSMA, have questioned whether a single European market – promoting the standardisation of spectrum and network sharing in 28 diverse countries – is viable at all.
Telekom Austria's head of regulatory and European affairs, Michael Jungwirth, slammed Kroes' formulation of the plans and claimed they did not actually facilitate any kind of growth or investment.
"The proposal is not addressing the right topics that are crucial to the industry," he told Capacity. "A common European market is the right approach, but this proposal has not been submitted with any impact valuation and every process is broken."
Jungwirth claimed that "one of [the] biggest mistakes is to concentrate on national markets when analysing the question of competition".
He instead urged Kroes to address competition law as a main priority. Kroes and her commission disagree. She claims that the sector will not see growth "by rent-seeking in protected national markets".
One of her main proposals is to ensure the build-out of next-generation infrastructure is accessible to the whole of Europe, to in effect make it easier for European companies to enter new markets.
This means regulators will have to ease regulation on new entrants in their national jurisdictions. While a number of the larger operators in Europe serve several countries in the continent, there is not one that is present in over half of the 28 states.
While the capability is there, it is not always easy or affordable. Recent research suggests network owners charge up to three times what they should to access copper wires, while spectrum prices for 4G are overpriced by a factor of up to 50.
A Deutsche Telekom spokesperson criticised the "excess regulation and regulatory uncertainty" of the past, which the company claims has set Europe back "with regards to investments in new broadband networks on a global scale".
The spokesperson claimed the company was fully behind Kroes' plans to create investment and innovation in Europe, and that Deutsche Telekom was open to the idea of further European consolidation.
"We welcome the initiative by Neelie Kroes, which is aiming to push forward the deregulation and consolidation of the telecoms sector in Europe."
Kroes wants to give operators consistent access to fixed internet networks in different countries and allow for a licence obtained in one European country to be usable in another, with the allocation of spectrum standardised. Sharing and trading of spectrum should be encouraged by operators, making pan-European businesses easier to operate.
"Our proposal is about fairness," claims Kroes. "It's about ending rip-off charges and unfair practices by telecoms operators."
Deutsche Telekom, like Telekom Austria, seems to concur with the overall idea of a single market, but was also far less enthusiastic about the execution.
"The significant move towards decreased regulation expected by the industry has not been achieved," adds Deutsche Telekom's spokesperson.
Roaming discussions
One of the most contentious issues in Kroes' draft is to break down the barriers of roaming rates, which has, as expected, generated uproar amongst operators. When submitting her draft, Kroes conceded that "roaming will grab the most attention".
International roaming within European states represents one of the largest revenue generators for the mobile players. Kroes believes the charges are "unfair and frustrating", and is proposing a new deal to implement "roam like at home" services.
This would allow consumers to use their phones across Europe at no extra cost, and to receive calls free of charge when outside of their home markets.
Orange, which this month launched an LTE signalling service as part of its wholesale business, believes Europe needs to boost its 4G roaming offering.
Their system is designed to enable operators to provide customers with an improved 4G service while roaming outside their home country.
Alexandre Pébereau, EVP of international carriers at Orange, declined to directly comment on the EC's plans for a single telecoms market, but outlined his belief in the importance of increased roaming and better services for 4G in Europe.
"[Users from] continents like the US and Asia, which are well developed in LTE, need to be able to come to Europe and access a similar service level here," he says.
Kroes has argued her case for an EU single market with the view that it facilitates the necessary growth in the European market to enable the continent to keep up with and compete against North America and Asia in particular. "The telecoms sector needs the scale to compete globally," she claims.
Despite this, Pébereau is not concerned about Europe falling considerably behind other markets when it comes to 4G, and believes the very idea of continents competing does not present a valid issue.
"Europe's 3G service has not been rivalled anywhere, particularly as we invested in capacity at the right time," he says. "At that time, Asia and North America leveraged CDMA technology to develop broadband."
While Orange's wholesale signalling service is intended to improve 4G performance, it is also indicates the company's commitment to the development of roaming services.
"We need to see technology developments that are consistent across continents," he says. "Roaming is not a big issue in the US because only approximately one in five Americans own a passport, whereas we have 28 countries."
In response to Kroes' roaming proposals, Deutsche Telekom pointed to its recently launched roaming offering, and a spokesperson told Capacity that the company "has already demonstrated that the market works perfectly well without regulation".
Telekom Austria, too, rejected regulation for open roaming, stating that less radical legislation for roaming is already in place.
The only beneficiaries of Kroes' "roam like at home" plans, in the operators' opinion, would be incumbent broadband providers. Carriers would be at the mercy of copper and fibre broadband operators, who could charge a lot more if consumers decide to update their social media profiles every five minutes over their networks.
Rushing towards regulation
The third major element of Kroes' plan is to assess separate regulators across Europe, and ensure that the industry body which they all sit under is given additional power, to enable more strategic co-ordination. If her ideas for spectrum sharing, network consolidation and the facilitation of operators entering new markets come into force, an influential body will be essential.
The Body of European Regulators (BEREC), which presently represents all 28 national telecoms regulators, has fuelled the idea that the proposals appear rushed and do not address key issues. It argues the proposals give the commission more power and undermine national regulators.
BEREC, which actually helped to draft the regulations, believes the severity of Europe's position in the sector has been exaggerated, and the plans could undermine legal certainty and prevent investment.
"These proposals risk undermining the ability of national regulators – whether acting individually or collectively – to take appropriate and proportionate regulator action in all the relevant markets," it says.
Kroes has not gone as far as attempting to create a single European regulator, despite stating that "in a true single market, this could ultimately be the most logical solution". She has, however, been criticised for not coming to this solution by the EU antitrust commissioner, Joaquin Almunia.
Creating a stir
Described by Kroes herself as the most ambitious plans in 26 years of telecoms reform, the plans have certainly created a stir.
A Capacity industry insider who does not want to be named reveals that Kroes invited all the major CEOs from European telecoms companies to a meeting over a year ago.
All the executives were then invited to submit ideas of how a single market could be achieved, and "proposals suggested which could create a positive impact were replaced by sour ideas that are not viable".
Most European companies wanted regulators to break down the border barriers and enable consolidation. This has not been addressed, the majority argue, and unrealistic proposals have been suggested instead.
On October 25 2013, EU leaders will meet to vote and discuss the proposals.
Kroes is already fighting a battle with the operators – will she crumble in the face of the politicians?
