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6 months ago
23
The much-anticipated Letta Report on the Single Market contained many strong recommendations across several key areas. Jennifer Baker spoke with Enrico Letta to discuss what he hopes for in practice, with a deep dive into one of the central topics – telecommunications.
JB: Let me start by asking you to describe in general, how you feel your report has been received from three main stakeholder positions: politicians or lawmakers, industry and business, and civil society or consumer representatives.
EL: My reaction in general is very positive. I am very happy with the way in which it was received. It was received as a challenge by the political world. My big fear was to have a large indistinct applause. That would have been the worst for me. But in fact, I received a very obvious, deep discussion on the different subjects with many positive reactions, or reactions on some subjects where you have received doubts.
Also, the fact that the Hungarian Presidency decided to put this topic as one of the flagships of the Presidency in the next semester was more important good news. So, in general, from the political side, I am happy because I received not just a generic applause, but deep discussion and the possibility to have a follow up.
I’m very happy with all of the stakeholders, because I’m full of invitations everywhere to discuss the report with people on the ground with industries with business, financial sectors, credit unions, in different countries. [This] next week will be for me, Vienna, Frankfurt and Madrid. That means the report was exactly what I hoped: to have a tool to make possible the opening of a concrete discussion on the future of the European Union.
Regarding civil society, I think it is very interesting. The report is today part of the discussion in the academic world – next week I will be in university in Madrid, for instance – and in many other debates and discussions with consumers associations, anti-climate change associations, political parties. My hope, of course, is that the report can feed the political debate during the upcoming electoral campaign and the post-electoral campaign debate.
There’s a big need for discussion of long-term plans at the European level, and not just having discussions on how to react to a crisis. And that is for me a very, very interesting point.
JB: You highlighted defence, energy finance, and telecommunications as key pillars of issues that we need to talk about. The invasion of Ukraine by Russia, which also triggered an energy crisis, certainly puts defence and energy on the table.
In terms of past crises, the financial crisis stands out, so finance must be discussed. But what about the telecommunication sector, why is that included? Why these four pillars specifically?
EL: In reality, there are two reasons. The defence reason is exactly what you said. However, in my education, I had always in mind that defence and the single market are two completely separate sectors. And when I started my journey in September, I did not plan on having defence among the different topics.
I changed my mind during my journey, because all the governments and many stakeholders told me that defence is one of the big issues. And it’s absolutely necessary to have an improvement there.
On the other three – telecom, energy and financial markets – in reality, the inspiration came to me from the last conversation I had with Jacques Delors. Because last time, before he died, he told me that the single market when it started in 1985 was without these three subjects. The Member States at that time, told Jacques Delors these three subjects are for us, not for you. That was the key point.
And so, it is not by chance that even today, you’ll have more national competences than European competences on financial services, telecom, and energy. And in the analysis that I put at the top of my report, this is the reason why we are less competitive than the US and China because they take advantage of the scale, or the dimension of a large single market and we don’t. Because in these three areas, the national dimension is more important than the European one.
In telecoms, in reality, we don’t have a single market. We have 27 telecoms markets in Europe and the consequence is that the American operators or the Chinese operators are more competitive than the European operators.
The consequence of that is that we have more than 100 very small European operators. And when you are too small in this field, there are consequences that are very bad in terms of competitiveness, capacity for innovation, and so on.
JB: You say European companies “suffer from a stunning size deficit compared to their global competitors, primarily the United States and China.” Looking at the United States, we’ve seen a lot of consolidation there in the telecoms market. It hasn’t necessarily led to lower prices, or better services for consumers. What’s your reaction to that?
Do you think that excessive consolidation in Europe might lead to a price rise or perhaps limited services?
EL: I think your point is good. And excessive consolidation would bring problems for consumers. I think we have to protect our consumers. But today we have an excessive fragmentation. So, I think as the Latins used to say “in medio stat virtus.” The present European situation has 100 operators, in the US there are three operators.
I believe we can find a scenario where we can move from 27 markets to one single relevant market that would help consolidation. But at the same time applying the rules of the competition at a European level, we can avoid consolidation that goes too far. We can have a consolidation that will reduce from 100 operators to 20 or 30 maybe – that will be the market to decide.
But what I think is that we can find a solution in the middle between the present European one and the present American one to both protect the consumer and to expand the competitiveness of the industry. For a very simple reason, it is true that the European consumer today has better prices, in comparison with the American one.
But it is true, too, that the European industry is in such bad shape, that the investments of the European industry will be lower and lower, and the consumer of tomorrow will pay the price of this weakening of the industry. We also need investment in innovation. We need scale, because scale is the condition to get innovation. That is for me a crucial part of the topic.
JB: Am I right in thinking that part of this investment that you are saying we absolutely need, is investment into infrastructure? And where will that money come from?
EL: I think the investment for operators will come principally from consolidation. I think that a consolidation will help them to have more room for investments. That is the crucial part.
I repeat, I want consolidation not at the American level, but at the level of what is needed in Europe with the possibility to protect consumers in general.
I don’t want the European Union changing its own values. I think the European Union has to continue to be itself. But at the same time, the European Union has to change on some aspects that are not working, like fragmentation. So, this is one of the big frames for me.
The other very important frame, in general for Europe, is that today, inertia means decline. This is the big, big topic I would like to launch. We need to act. Inertia means decline today. If we stay as we are, we will decline.
JB: Finally, looking to the future, I presume the next few weeks and months, you will be discussing this report and continuing, as you say, travelling around Europe. But looking further ahead, when might it be time to do another report or revision of this? Five years? 10 years? And would you do it again?
EL: Ha! You know, I hope that a large part of what is written in the report can be implemented during the next five years. Because I clearly said at the very beginning of the report, there are no Treaty changes proposed in the report, so what is written is feasible. And I hope that will be the case.
I also strongly hope that the next five years can be the years in which we can recuperate what we didn’t do in the last 25 years on the three, four subjects you mentioned. I will push in that direction with all the stakeholders, the political leaders. I will repeat every day: it’s feasible, it is a necessity, and inertia means decline.
This interview was edited for clarity and brevity.
[By Jen Baker I Edited by Brian Maguire | Euractiv’s Advocacy Lab ]
English (US)