Tough-talking commissioner drives hard bargain with telcos

9 Oct 2008

Consumer champion Viviane Reding won’t stop until Europe has a single telecoms market.

She has raised the hackles of European fixed and mobile telecoms operators by forcing them to slash call and message costs, but is the toast of Europe’s 500 million citizens who feel ripped off when they get their post-holiday phone bills or who live in border areas.

Viviane Reding, Europe’s Information Society and Media Commissioner, was in Dublin last week to reinforce Ireland’s great opportunity in sitting on an abundance of wireless spectrum, which will be a key resource for the future of the internet and broadcasting.

Wireless spectrum-related services in Ireland accounted for 2pc of GDP in 2006, mostly from mobile services (€1.4bn), but also broadcasting (€0.3bn).

As Ireland prepares for analogue switch-off and the move to digital television next year, the importance of spectrum – or digital dividend – for future entertainment, business and emergency communications cannot be underestimated.

And Ireland has loads of it – we have no borders or no significant military forces that require this spectrum – and as ComReg (Commission for Communications Regulation) points out, the inward investment potential for technology giants to trial future internet services in Ireland could be enormous.

“The social and economic impact of the dividend could be huge. This is something we need as we coast towards a significant slowdown of growth in the EU,” Reding said last week as she encouraged Ireland to lead by example on the digital dividend debate.

As well as paving the road for 100pc broadband across Ireland, it would take the country from the bottom of the EU broadband league tables to the top.

The US is about to move to analogue switch-off following the Super Bowl in February. A handful of European nations have already switched to digital, but Reding wants the countries to move in concert. “Fast decisions on the digital dividend could enable Ireland to transform swiftly into the Celtic tiger of wireless Europe,” she told a ComReg conference last week.

Over the past three years, Luxembourg native Reding, a former journalist for the leading newspaper in that country, the Luxembourger Wort, has pushed through legislation in the European Parliament that will make mobile phone calls and text messages cheaper in the next few years, by 70pc and 60pc respectively.

In recent weeks, the European Parliament voted to create a single European telecoms market. This will result in a European telecoms operator from which staff will be seconded from the 27 different European regulators. The move will also see a push for functional separation of incumbent operators’ commercial and wholesale businesses.

Reding explained that the European Parliament was initially reluctant to reform the European telecoms market.

“It was reluctant in 2007 but now understands that we need a single European telecoms market. However, to achieve that we first need to have good regulatory sense. This means that instead of 27 regulators contradicting each other with different decisions, they are sitting around the table talking about common issues and taking co-ordinated decisions.”

She said that a meeting of the Council of Telecoms Ministers at the end of November will be pivotal. “Technology advances all the time, other continents are advancing all the time. We cannot wait forever without applying European logic to our telecoms markets.”

In Ireland, the issue of functional separation of commercial and wholesale businesses of incumbent operators – as done in the UK by BT and Ofcom – has been a thorny subject, with Eircom averring an interest in a structural separation that would make these divisions in effect separate companies.

“The separation of an operator is not an easy task, and it is often an irreversible task,” Reding said, warning of the pitfalls.

Looking ahead at the argument for functional separation – whereby each business would function independently but remain under the ownership of the incumbent – Reding said the powers of regulators such as ComReg would need to be enforced.

“If there is no other way to have a competitive telecoms market where competitors are allowed to come in and offer services, then the national regulator – after having made sound market analysis and put all the arguments on the table – should have the ability to go for functional separation.

“Structural separation is a very radical step,” she warned.

The establishment of a single European telecoms market is designed, she said, to instil a “chemistry” between operators. “If you are sitting around a table talking about each other’s problems, then you are no longer sitting in an ivory tower.”

Reding said she was grateful to the European Parliament for supporting the idea of a European telecoms regulator. “It’s a good idea and will ensure a European regulatory presence in each country. I researched the market and found too much duplication and too many ivory towers. That can’t continue because technology is advancing too fast and we are losing ground.”

Beyond the sweeping changes she has brought about that will reduce ‘bill shock’ for the average EU consumer, Reding said she is pursuing Europe’s R&D agenda. Europe doesn’t have a specific Silicon Valley, and only 1.5pc of GDP is invested in R&D across Europe, compared with 3pc in the US.

Her response has been to bring industries together and to work on areas of massive opportunity such as robotics, photonics, mobile and satellites. “Out of nine areas, two have become public-private partnerships in the areas of nanotechnology and embedded systems, and they have brought together funding of €2bn each. Getting from innovation to commercial application is a weakness we need to overcome.”

Before becoming Information Society and Media Commissioner, Reding was Europe’s Education Commissioner, and she has set a target to have every school in Europe properly equipped with ICT and connected to the internet by 2010.

“Because we have broadband deficiencies in rural areas, you can’t in effect have e-learning. So we need to get our infrastructure in order.

“Last spring, the European Council pledged to have all schools equipped by 2010. That deadline is very close and we’ll have to hurry to arrive on time,” Reding concluded.

By John Kennedy

Picture: the enforcer; Viviane Reding, EU Commissioner for the Information Society and Media, has brought about sweeping changes that mean better telecoms value for Europe’s 500 million citizens

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years