Europe’s Tech Com future. Orange election manifesto seeks true market connectivity in the Digital Age [Advocacy Lab Content]

Telecoms giant Orange has published a manifesto for the European elections, urging lawmakers to pursue a fully functioning Single Market in the Digital Decade. While market winds blow towards consolidation, Orange asks how the EU can become the best place to live in the Digital Age.

The answer they offer is services and connectivity. But despite efforts on the part of policymakers, Europe’s telecoms sector remains noticeably fragmented, particularly compared to the US where significant consolidation has taken place.

In an increasingly complex geopolitical world, the EU has prioritised resilience and autonomy. That means a well-functioning and competitive single market. But as former Italian Prime Minister Enrico Letta prepares his landmark report for the European Commission on the Future of the Single Market, it is clear the telco sector has some way to go. Letta lists telecommunications – alongside defence, energy, and finance – as one of the four pillars that we must put at the centre of the Single Market.

Speaking to the FT, Commissioner Thierry Breton acknowledged that “creating a true single market for telecommunications services requires a reflection on encouraging cross-border consolidation.”

“Scale is key to deliver on the massive investments needed to build the cutting-edge digital infrastructure Europe needs for its competitiveness. Too many regulatory barriers to a true telecoms single market still exist,” he said.

Technology deployment

European citizens cannot afford to wait for this. There are numerous challenges that reliable and better connectivity could help solve – including the green transition, potential EU enlargement and an ageing population.

Kamila Kloc, Director of Digital Decade and Connectivity, DG CNECT, European Commission, agrees: “Fast Secure, widespread connectivity is essential for the deployment of technologies that will bring us into tomorrow’s world: telemedicine, automated driving, predictive maintenance of buildings or precision agriculture.”

The Commission is clearly aware of this. The Digital Decade policy programme 2030 sets up an annual cooperation cycle to achieve common objectives and targets across four areas: connectivity, digital skills, digital business, and digital public services. The first audit was last year but targets have been missed. Fibre reaches 56% of the population, but only 41% in rural areas.

The Commission’s own White paper “How to master Europe’s digital infrastructure needs?” also recognises this connectivity need.

Achieving the overall targets by the end of the decade is an uphill task – one that requires investments. Orange estimates there is a €200Bn investment gap in delivering the Digital Decade targets.

Competition policy report

In the European Parliament meanwhile, in the annual competition policy report, approved by the Economic Affairs Committee last December, MEPs say that consolidation in the telco market is potentially “the only way to avoid selling infrastructure piece-by-piece to foreign non-EU companies and compete effectively in a global scenario.”

Despite marked increases in revenue across the wider internet ecosystem, industry stakeholders have contended that over the last two decades, European telcos have seen a decline in revenue and a reduction in market value due to excessive market fragmentation, spectrum costs, and an outdated regulatory framework.

Cross-border consolidation

Cross-border consolidation was initially considered to build pan-European telecom operators with the critical mass for bridging the gap between Europe with the US or the Asian digital leaders.

Orange says that telecom operators build, deploy, and operate their network infrastructure within the borders of a country, in a domestic market, as spectrum authorisations are national. They argue that the result, in the short-term, is gaining scale and sustainable growth that can only happen within the borders of their national markets.

The telco believes that the bar for telecom companies to successfully consolidate in the market is too high much of the time and is “only based on a consumer welfare standard and short-term price effect.”

Nonetheless, Orange says it appreciates some of the regulation of the current Commission, particularly the Digital Markets Act. “The DMA will open new opportunities in the digital ecosystem and help resolve the lack of interoperability, which restricts customer choice. DMA should also … grant telco operators cloud-based API access to the data gatekeepers collect on the quality of networks.’

They suggest this would help identify potential areas of improvement and optimise network infrastructure.

Ditch the ePrivacy Directive

Outdated legislation such as the 20-year-old ePrivacy Directive should be ditched, says Orange. “It is both inconsistent with the EU strategy and damaging for the European telecom industry that operators are not given the same rights as other stakeholders to innovate based on the GDPR rules,” says the telco, arguing instead for “the principle of confidentiality of electronic communications data” to be incorporated into the horizontal General Data Protection Regulation (GDPR) through a targeted amendment.

In a debate that has raged for several years, the manifesto also calls for a “level playing field” ensuring fairness between operators and Large Traffic Generators (LTGs) – i.e. the big online platforms.

Telecoms operators in general are angered by what they see as an unfair distribution of profits as the services that use their networks cash in without having to contribute to the infrastructure investment. It is worth noting that that investment also contributes to sustainability, mobile traffic optimisation and energy reduction in the green transition.

The manifesto calls for the EU to fully harmonise at the EU level the conditions for spectrum auctions. The EU is behind on standalone 5G, largely due to member states dragging their heels on spectrum allocation – yet another disincentive for telcos to invest.

But Orange’s manifesto also calls the EU to think beyond the spectrum and urges a European strategy on submarine cables and satellites – essential given that 99% of intercontinental traffic transits through submarine cables and big, new non-EU players are entering the satellite market. Globally the main investors are now US or Chinese actors. Politicians eyeing the EU elections in June will be aware of the need for the EU to be more competitive.

Tech Comm future

Orange says it believes that given the right conditions, the telecoms and IT worlds will increasingly converge and “networks will become more and more agile and telecoms operators will turn into ‘Tech Comm’ companies” creating new opportunities for European businesses and citizens.

“Roam like at home” when travelling within the EU was a huge win for the European Parliament and a strong message for those seeking another mandate during the last election cycle. In 2024, the electorate will want more comprehensive, far-reaching solutions.

[By Jennifer Baker I Edited by Brian Maguire | Euractiv’s Advocacy Lab ]

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