Business Technology

Saturday 23 August 2014

Stop regulators from hurting European mobile business

Declan Ganley

Published 01/05/2014 | 02:30

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Regulation is stopping us from having the best mobile networks we could have
Regulation is stopping us from having the best mobile networks we could have

The first cell phone call was made in 1973. Forty years later, whole new industries and economic ecosystems have sprung up.

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But in Europe, our regulatory approach to wireless is still stuck in the 1990s. When the European Commission does get involved, it's in the form of price controls – on international roaming, for example – rather than breaking down barriers to competition across all of Europe.

Wireless services are still mostly regulated on the national level. Those regulators fixate on maintaining a competitive national market, even though those national markets are in many cases entirely artificial.

Issuing wireless licences and regulating wireless services on the national level in the EU makes no more sense than regulating air-traffic control country-by-country.

Regulators, like anyone else, want to preserve their own jobs. But in wireless, they are doing so at the expense of consumers and corporations alike.

Europe's wireless communications industry was once the envy of the world. Now, it is fast falling behind the US, where innovation has turned America from laggard into leader. US regulators are years ahead of their counterparts in Europe in embracing the pace of change in the industry.

Tom Wheeler, chairman of the US Federal Communications Commission, recently spoke of the "fourth great network revolution".

He said that the current moment in digital networks has the potential to rival in significance the invention of the printing press, the steam engine, the telegraph.

Meanwhile, the UK's telecom regulator, OFCOM, gives a mid-range prediction that demand for mobile data capacity will grow 80-fold by 2030. Its upper-range prediction is close to a 300-fold increase.

The economic opportunity that this growth presents is enormous. But we must be in a position to seize it.

Europe's 28 telecom regulators constitute 27 more than is in the interest of European consumers, entrepreneurs and innovators.

This abundance no longer serves any European's interest, be they committed Federalist or Eurosceptic.

Radio spectrum doesn't care about borders within Europe and to make the best of that natural spectrum resource, neither should we.

The success of the GSM standard in Europe in the 1990s was a great boon to Europe's telecom businesses. But it also convinced the regulators that they were smarter than they were.

They tried to reproduce that success in the 3G auctions, but wildly over-optimistic prices paid for those licences actually set Europe's wireless industry back by several years.

Now, most countries are still awaiting a 4G service even as it becomes ubiquitous elsewhere in the world.

Carriers and regulators alike suffer from a dangerous bias in favour of the status quo in wireless and that bias is holding Europe back. Carriers worry about so-called over-the-top services stealing their revenue from texting and picture messaging. And regulators wring their hands over the phantom menace of "net neutrality," which today serves chiefly to hold back innovative business models that could benefit consumers.

In the US, for example, Netflix has been negotiating with broadband network operators to increase the speed of its video-streaming offering. There is no reason to fear this two-sided approach to broadband services. Indeed, in some cases they will incentivise carriers to invest in the capacity that consumers are demanding. But Europe's preoccupation with net neutrality stands in the way of these new business models.

Yet it is not the regulators' role to reward those who are clinging to the business models of yesterday. Consumers want faster connections, better coverage and more innovative services, whether over-the-top or provided by the carriers themselves. The winners deserve to be those who innovate fastest, not those best able to work the halls of power.

There was a time when every country believed it needed a flag-carrier airline, just as it had its national telco, utilities and so on. Those days are as dead in telecoms as they are in air travel.

What we need now is a truly European market, because only on the European level can Europe be competitive again. Fewer carriers, competing across a borderless Europe and embracing the services consumers want – rather than those the carriers want to sell them – is the future of Europe's wireless market.

The sooner the regulators can see that, the sooner Europe can start catching up with the rest of the world.

Declan Ganley is chairman and chief executive of Rivada Networks, a telecommunications company specialising in the use arbitrage of wireless spectrum. He is also a political activist and former founder of the pan-European party, Libertas.

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