The annual event in Brussels saw operators continue to push for in-market consolidation. Less was said of ‘fair share’ but Europe’s (lack of) leadership came under the microscope
Geopolitics and contrasting approaches to regulation
On 7 November 2023, the FT and ETNO co-hosted their annual Tech & Politics Forum, with ‘relevance’ the theme for this year’s event. The regulation of telecoms and of digital markets provided two ever-present topics for discussion, but there was also no getting away from AI given the global spotlight of recent weeks. While there was consensus that technology needs to be regulated, there was no real agreement on what that should look like. Anu Bradford (Professor, Columbia Law School) highlighted the different approaches to regulation around the world: America has a market-driven model, China’s is state-driven and the EU’s is rights-driven. Amid increasing geopolitical tensions and protectionism, she asserted that “the tech war is real” but that through the ‘Brussels effect’, the EC has the ability to shape the right global governance frameworks – and also to export bad regulation. Bradford considered that securing talent would be vital to the EU being able to compete with China and the US (in AI and elsewhere), and to putting itself on the path to technological sovereignty, so requires a proactive immigration policy that avoids blanket bans on students from certain countries that would prove self-defeating. Commissioners Iliana Ivanova and Margaritis Schinas both made similar points later on the importance of skills, whether that be for individuals’ full participation in the online world or for boosting the EU’s cybersecurity capabilities. Ivanova added that while the bloc is focused on “derisking” in critical areas (e.g. reducing reliance on other markets for semiconductors), its strength lies in its openness, rather than aggressive industrial policy.
Reinventing the operator model
The first panel discussed the seismic shifts taking place across the digital ecosystem and questioned whether the EU should be considered a leader or a laggard. Lise Fuhr (Director General, ETNO) described how 15 years ago operators all looked alike – now they have very different models. Some diversification has been out of necessity given the prices consumers are willing to pay for telecoms services. She stressed that without change, you will be in trouble. This presents opportunities and routes to new business models and partnerships, but also requires investment and political support. With 5G adoption in Europe well below the US and Japan, Fuhr and Guillaume Boutin (CEO, Proximus) considered there is value yet to be extracted. Boutin stated that operators must now “play offence and defence”, which involves not only network deployments and virtualisation, but also adopting an entrepreneurial mindset to expand into adjacent markets. He noted that Proximus will have 50% of its revenue coming from non-core services (such as CPaaS) within the next three years. On how Europe can compete, Alex Rodgers (President of Technology Licensing, Qualcomm) identified operators’ need for a scale – and questioned the logic behind Luxembourg being a four-player mobile market. He also took on the topic of AI, making an interesting observation that currently AI-based search is seven times more expensive than internet search, with considerably more energy required too.
Familiar calls from operators for in-market consolidation and a regulatory reset
Commissioner Vera Jourova stated that Europe would be unable to secure digital leadership without reliable and affordable high-speed connectivity, providing an ideal lead-in to the operator-led panel that would dissect this apparent conflict. Agreeing with Rodgers on the importance of scale, Mike Fries (CEO, Liberty Global) argued that the region’s sector is inefficient and unsustainable, pointing to a 150% increase in usage yet 30% reduction in ARPU over the last decade. He saw an inherent conflict between regulators that want innovation and investment, as well as low prices and competition. Timotheus Höttges (CEO, Deutsche Telekom) provided one of the event’s lighter moments, saying that operators’ long-running grapples with regulators has led to him going bald and Fries’s hair turning grey. He made some impassioned comments about tackling Europe’s “over-competition” and bureaucracy that drive up costs and slow down rollouts, urging policymakers to “wake up” to the industry’s worsening situation. He highlighted the 178-page AI Act before we even have the technology as an example of how we like to over-regulate everything. In an apparent shift from previous remarks about operator’s forays into non-core services, he said he would love to go into additional horizontal services (cloud, digital etc), but simply doesn’t have the room to breathe, with all spending going on the network. Christel Heydemann (CEO, Orange), urged deregulation of anything that inhibits network deployments, stating that rules for fibre should not be grounded in the era of copper. She pointed to an industry where the cost of capital is higher than the return on capital. On in-market mobile consolidation, Fries said he was hopeful and appeared sympathetic to competition authorities that must hear diametrically opposed views, but Höttges called into question why the review process should take so long.
So what is the solution? For Höttges it appeared to be a policy environment similar to that in Asia. Having recently returned from a trip to the region, he found politicians who had “their heart in the right place”, and crucially a plan. Fries pointed to the UK’s fibre altnet scene as “chaotic, irrational and not sustainable”, saying regulators need to be open minded to what happens when it goes wrong (given they created the problem). With the Digital Decade targets on the horizon, Heydemann said that operators cannot rely on the promise of a (albeit welcomed) ‘Digital Networks Act’, which could take two years to materialise. Interestingly, operators only made incidental remarks on ‘fair share’ – despite it dominating the previous year’s conference and much of the 2023 policy debate.
Environmental impact of AI already on the radar
Far from a new agenda item, sustainability matters have become a priority, which Kostantinos Masselos (Chair, BEREC) felt should be pursued collaboratively. While European regulations, e.g. the EECC, do not directly regulate for sustainability, Masselos highlighted the potential of state aid and spectrum policy to contribute, as well as BEREC’s own work pointing to a lack of consistency in the collection of environmental data. He suggested that you could have a horizontal agency to collect data, or you could give powers to national regulators. Miapetra Kumpula-Natri (MEP) believed that collecting comparable information could be useful for consumers but didn’t believe it was time to intervene and require it. Ana Figueiredo (CEO, Altice Portugal) stated that her company has seen a 15% reduction in its emissions as a result of the transition to fibre and 5G, while having an enablement effect in other industries. She underlined how vital it is to decommission legacy technologies, having a cost and an environmental benefit for operators. More than one panellist pointed to data centre traffic growth being a direct result of AI, and that at current levels (30% YoY), would quickly become unsustainable with significant environmental considerations. Figueiredo suggested that big tech should consider making a ‘fair contribution’ to the solution…
