In an open letter sent ahead of the Telecommunications Council, taking place end of this week, 13 CEO’s of leading telecom companies express their common concerns about the last amendments made on the Electronic Communications Code and on the ePrivacy Regulation. “We believe that growth, employment, investment and contribution to taxation are at stake”, claim the 13 ETNO (European Telecom Network Operator’s Association) members.

Critical moment

The warning comes at a critical moment for telcos, as end of roaming will be effective as of June, 15. Although final agreement on price caps was reached in February, most European telecom leaders had already tempered the good news. “We are celebrating the death of roaming but nobody has figured out how to replace revenues for telcos”, said at the time Vodafone Chief Executive, Vittorio Colao.

That’s indeed the core of the problem: over the last decade, telcos have suffered from hard voice revenue erosion, and they have not reaped the benefits of heavy network investments yet. As those investments reached a peak in 2016 and are expected to remain stable on the mid-term, telcos urge the EU regulator to soften privacy and security rules in order to facilitate data monetization. “Achieving ubiquitous superfast connectivity will require up to 660 billion euro and is incompatible with any rules extracting value from the sector”, argue the CEOs in their joint wake-up call.

End of roaming will for sure hurt telcos’ bottom line. But there is a difference between customers’ willingness to pay for true value (let’s say, for better connectivity or higher internet speed), and customers’ obligation to pay (because they cross a frontier), which isn’t. That said, creating value requires huge, long-term investments. Telcos will engage in such a journey only if the visibility until monetization is good enough. That is, if the regulatory environment is stable and investment-friendly.

Political resistance

For telcos, lights had turned green in September 2016, when European Commission President Jean-Claude Juncker unveiled plans to deregulate the market, formalized in the Electronic Communications Code. The Code included “forward looking and simplified” rules intended to make it more attractive for firms to invest in infrastructure, both locally and internationally. For 5G in particular, a unified approach was foreseen in order to harmonize spectrum regulation.This should, according to Juncker, allow all European cities and transport lines to get full 5G coverage by 2025.

Nevertheless the plans have recently met opposition from telecom ministers in a number of EU members states, who want to keep control on spectrum licensing and auction processes. The European Parliament is also concerned deregulation could hinder competition.

Save the 5G project

Operators have firmly criticized EC’s intention to impose a new set of stringent rules regarding spectrum licensing for 5G. “Spectrum reform is the essential enabler of Europe’s connected future. It should ensure predictability for long-term investments through longer license duration as well as fair and predictable license conditions”, says the open letter. A few days later, a whole bunch of EU telecom associations also signed a joint statement for saving Europe’s 5G ambition. “5G is one of the engines of European innovation, a tool to ensure improved consumer experience across industries, as well as a crucial enabler of the Continent’s competitiveness.”

Europe is squeezed

A backward step on 5G is the tip of the iceberg. In fact, the work on Single Digital Market is far from complete, and the end goal of creating a European “Gigabit Society” starts to blur. Discussions at the European Parliament and Council are likely to end up in a much more timid approach, both the Electronic Communications Code and the ePrivacy Regulation being impacted.

Digitally speaking, Europe already runs behind the US and Asia. The gap could even widen, warn the 13 telecom CEO’s: “Today, investors estimate that, thanks to a better regulatory environment, other regions of the world are out-investing Europe 2 to 1 in digital networks. The same applies to digital services, with the flat growth rate of our digital ecosystem as opposed to strongly positive trends in Asia and North America. This should be reason for alarm and action, especially in the context of global competition and fast-paced technological change.”