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Speech Neelie Kroes: Adapt or die: What I would do if I ran telecom company

Met dank overgenomen van Europese Commissie (EC), gepubliceerd op woensdag 1 oktober 2014.

We're all friends here. But sometimes I think the telecoms sector is its own worst enemy.

You know I want a telecoms sector that looks forward to the future.

In fact - you're probably all looking forward to the very near future, when the Juncker Commission takes office, when you won't have to put up with me anymore.

Well just today you are stuck with me. So allow me to be direct.

But rather than being critical about the past, let me be positive about the future. I welcome the fact that ETNO is looking at the need to change. The Think Digital manifesto announced earlier today should help ETNO to play a positive role in shaping Europe's digital future.

I'm looking to the future too. But a little further ahead: to a future Europe which I hope is bright and digital. Which is connected, open, and secure.

Europe today is about getting the economy back on track - about finding jobs for the next generation of young people. Digital is central to that challenge.

Soon we will see everything connected. Cars and classrooms, homes and hospitals, communities and cities, farms and factories. Everyone crying out for cloud computing, big data, 5G, the internet of things.

So I want to ask: what is the telecoms sector's relationship to that digital future? Will you be leading us there? Or will you be dragged along behind, against your will, resisting until the last?

I often ask, "What would you do if you were me?"

You're probably bored of hearing me ask that. So today I'm going to change it. Here's what I would do if I were you. Here's how I'd steer a telco through dynamic digital developments.

Let's be clear. That future market won't be characterised by rent-seeking, and protectionism. It won't feature players stuck in gilded national cages. It won't mean looking backwards to old business models and dated revenue streams.

No. It needs a strong sector. A sector that is diverse and dynamic. Able to explore new services and new business models. With operators working across borders: large, strong pan-European players alongside smaller niche players.

A sector that offers convenience, competition and choice. Offering citizens and businesses tailored products they are prepared to pay for.

A sector able to invest and innovate. With the economies of scale to think big, beyond borders, and compete globally. With the fast network capacity to support a digital future.

And I am glad that you recognise, in your manifesto, the role of public investment too. I hope that support can flow, where the market cannot provide, thanks to structural funds and revised state aid rules.

That is my vision. But how we get there?

Ultimately: I can give you the ingredients. But I'm not the cook. Nor will Gunther Oettinger be. We don't prepare the menu: you do.

You discussed that menu earlier today, including the ingredients that we bring to the table such as regulation. Here we are on the same page - I absolutely agree that we need all players to be dynamic and adaptable. Policy makers and regulators - but also operators! - need to be swift and responsive to deal with digital developments.

[ If necessary : But let me react to what I heard in the first panel discussion earlier - it's all very well to talk about deregulation, but not if that's a code-word for keeping protected national markets. You can't have consolidation on national markets without having a single regulatory framework contributing to a genuine single market. And then of course we can ensure that that framework is open and flexible

[Consolidation]

So when you ask me about consolidation in the mobile sector - which sometimes appeared to be the only thing you wanted to talk about - here's my response. On the one hand we want consumers to enjoy genuine choice, a real range of services and suppliers. On the other, you have markets that are too small to justify multiple operators, with too few economies of scale for that to be efficient.

Competition and consumer choice matter; they matter now and they matter tomorrow. That is a focus of EU competition policy and I can't see that changing.

So how do you square that circle? The fact is: any competition assessment is made within a particular market. Change that market, and you change the assessment.

That is why our goal has been to bring down barriers, bring down borders, and change that market! Move towards a telecoms single market, where telecoms companies can think European to compete globally.

[Over the top players/level playing field]

And when you ask me about competition from over-the-top players: yes, a changing market impels us to examine our framework. But I am also clear: the current situation of European telcos is not the "fault" of those OTTs.

Today, all EU homes have broadband coverage; 76% have a connection; almost half can access it on their mobile. They are demanding greater and greater bandwidth, faster and faster speeds, and are prepared to pay for it. But how many of them would do that, if there were no over the top services? If there were no Facebook, no YouTube, no Netflix, no Spotify?

I listened with great interest to what Reed Hastings had to say earlier…

In fact: OTT players are the ones driving digital demand - demand for your services! That is something you can work with, not against.

So here's my advice to you. If you think rules are incorrect or unfair: then tell us, and tell us why.

In many areas, I agree. I agree, for example, that rules on reporting data breaches should not be for the telecom sector alone, and that is why we proposed extending them through the network and information security directive. The chain is as strong as its weakest link. Internet platforms and cloud services are vitally important to economy and society: they need to be within the scope of that Directive. Risk management and reporting major incidents is not an unusual thing to ask nowadays. Cyber security needs to become the "New Normal".

That's one example of where we need to up our game. But more generally: I am clear that the general solution is not to erect new barriers, or just make life equally hard for everyone: that isn't the answer to any problem.

So if you're making those complaints: be specific. "Regulate my rival" is not a general call that will ever find much resonance.

[Deregulation]

I know you also argue for deregulation. In a competitive market, you do not need ex ante market rules - you can rely on competition rules. Who knows, maybe the telecoms sector itself will one day reach that level of competition and won't need ex ante regulation. In the meantime we can be incremental: gradually decreasing the burden of regulation as competition increases - like through reviewing and cutting down the list of relevant markets. And all along, of course, competition rules will always will require fast and firm enforcement for a level playing field.

[ Net neutrality]

Or take another area you have talked about this afternoon: net neutrality. I agree we need to find a solution that guarantees openness and promotes innovation. Different people have different views about the best way to achieve that. But on one thing I hope we can all agree: this market needs certainty, coherence and consistency. Not every country of the EU making their own divergent decisions. Nor an endless delay.

[ If necessary: And here again, let's not kid ourselves. There is a need for, a demand for, investment in broadband capacity. And of course that has to be paid for. But customers cannot be forced to subsidise specialised services they do not use, and those specialised services cannot be allowed to slow-down access to the open Internet. ]

[Fragmentation / telecoms single market]

Today's European market is fragmented, ring-fenced, and subscale. I know many others today have made that point. My dream is to change that. To see equally open and unified markets on both sides of the Atlantic.

We have taken the first step, our connected continent proposal which I hope will soon be completed. That isn't the final word; it won't alone deliver the dream. Not for any of us.

But it is a first step. And others share that dream, and can take the remaining steps. This is a project that will continue under the next mandate; as Jean-Claude Juncker has made clear.

A project that can ensure our digital future, where a strong telecoms sector supports every European. That is what I long for, and that is what all of you should long for too.

Thank you.


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