EU takes advantage of telecoms milestone to push for network funding overhaul

The European Commission has given its clearest signal yet that it intends to significantly intervene in the way internet connectivity is funded in the bloc in the coming years.

In a keynote onstage this morning at the GSMA’s mobile industry association’s annual show, the Mobile World Congress (MWC), Thierry Breton, European Union Internal Market Commissioner, warned that networks current generation are not up to the task of “mass transformation” just beginning, driven by increasingly immersive technologies such as virtual worlds or AI developments powering emerging technologies like connected cars and smart cities – which rely on high speed and bandwidth and low latency but massive interconnectivity to deliver on their disruptive promise.

“We will have to find a funding model for the huge investments needed that respects and preserves the fundamental elements of our European acquis,” he told delegates early on the first day of the annual telecommunications conference in Barcelona – while emphasizing that the forthcoming pivot must guarantee freedom of choice for end-users and respect existing Union rules on net neutrality, as well as guarantee freedom of competition by guaranteeing fair and competitive conditions for services.

The EU established its own future stand last year as part of the Digital Decade policy agenda – which includes connectivity targets, as well as plans to foster digital skills and digital businesses. But with network infrastructure at the heart of all things digital, the Commission’s policy objectives here are tied to the evolution of network infrastructure – giving telecoms operators a new degree of leverage when it comes to is to discuss the evolution of the regulatory landscape in this area.

In his speech today, Breton acknowledged that “the connectivity revolution challenges the traditional model of vertical integration”.

“The digital industry will need to move towards decentralization and interoperability, focusing on developing open and interoperable systems that allow different devices and applications to work together to create a more connected and efficient world,” he said. he predicts. (And rjust at the right time this morning, the GSMA announced a new industry-wide initiative on a universal network API framework – called GSMAOpenBridge – which she says will be “designed to provide universal access to carrier networks for developers” – apparently singing from a similar anthem sheet.)

“The real transition will be Web 4.0 where everything will be seamlessly interconnected. With virtual twins, the copying of everything, to manage and predict the behavior of a building to a car, the human body and even the planet Earth,” Breton further predicted in his speech. “This transition will not be possible without the use of supercomputing. We will need to be able to move massive amounts of data quickly. And that should be backed up by interoperable systems around the world.

“In other words, tomorrow everyone will have a supercomputer in their pocket, in their car, at home.”

Enabling this necessary leap forward in connectivity is the focus of a consultation the EU launched on Friday, he said. The EU consultation offers a number of options on how to finance fixed and mobile broadband network infrastructure in the future, including the possibility of direct payments from all digital service providers; or a subset of so-called “big traffic generators”. (The latter is what telcos have publicly claimed.)

At the same time, the bloc also passed a proposed regulation, the Gigabit Broadband Act, which it says will propose new rules to enable faster, cheaper and more efficient deployment of Gigabit networks in the EU.

“Just a few days ago, we launched a broad consultation on the future of the connectivity sector and its infrastructure. The consultation has been described by many as the battle for a fair share between Big Telco and Big Tech. A binary choice between those who provide the networks today and those who feed them with traffic. But let’s be clear: there is much more at stake. It is not a question of whether one particular interest should prevail over another. It’s about realizing the giant leap that awaits us in terms of connectivity,” continued Breton.

“We are not making the most of the potential of our single European market with its 440 million citizens (480 million with Ukraine in the process of joining the EU). It is time for us to have a serious discussion on the possible existing obstacles to the cross-border consolidation of electronic communications providers in the EU as well as on the advantages of an integrated radio spectrum market. I consider that these two problems are currently holding back our collective potential compared to other continents.

“We are at the start of a new revolution,” he added – before signaling an appetite to upend the economic order with a nod to the power of creative destruction. “In the years to come, the whole industry will have to make a radical change and revise its business models. Some might describe it as a Schumpeterian moment. The industry will have to adapt to survive. Or, to put it more positively, adapt to succeed.

His speech followed the opening speeches of the CEOs of the operators Telefonica and Orange.

Jose Maria Alvarez-Pallete, CEO and President of Telefonica, painted a picture of the transformation of the root and branch network acting as the engine of the disruptive technologies (and economic growth) of the future – but he said that all this change radical depended on getting a “fair share” of those who generate the most traffic on the networks.

Alvarez-Pallete suggested carriers are ready and willing to do the work to retool their infrastructure — into what he described as a “massively decentralized supercomputer” — and develop new business models to adapt to an era where their reconfigured pipes act as a “platform innovation” (or a “massive real-time enabler” for all sorts of disruptive applications). But he argued that the carriers deserved a much more “balanced” contribution from the ecosystem than they currently receive – singling out Big Tech as having to contribute for the traffic their (popular) services generate.

Orange CEO Christel Heydemann was even more candid in her message: arguing that European telecommunications operators are in a completely “paradoxical” situation where their networks are recognized as critical societal infrastructures and yet “massive” investments what she said they are required to do are “hard to monetize,” with consumers always expecting to pay less and get more.

“The whole industry is at a crossroads,” she warned, calling the situation “unsustainable” – and citing a survey of European telecoms operators in which nearly half of chief executives company respondents said they do not expect their companies to survive another decade.

“The rules of fair play begin with recognition of the current imbalanced situation,” she added, urging European lawmakers to “recognize that the telecommunications industry has been one of the greatest contributors to our economies. “; and accept the carriers’ complaint that it’s unfair, they should be saddled with billions in costs while a handful of big traffic generators get to roll over their networks, laughing their way to the bank.

An “appropriate funding framework” for the networks of the future must focus on these big generators of online traffic, she insisted – calling the EU consultation a “first step” towards an “open but fair” future. “.

While Breton’s speech didn’t literally spell out surrender to telecoms demands, the EU’s mood music will surely appeal to this audience filled with industry suits.

The commissioner told MWC delegates his message to them is that they can “count on my determination to jointly achieve our 2030 goals” – goals that require the bloc to seize what his speech also describes as a “revolution connectivity”.

“Consultation is of course only part of the puzzle we have put together over the past few years,” he added. “Ladies and gentlemen, let’s stop looking at the world with today’s eyes, or looking in the rear view mirror. Let’s focus on the future, where we want to be and the steps we need to take to get there.

“I encourage you all to participate in this reflection. Whenever there has been a big technological revolution, Europe has been there, and this time I want Europe to be there too. We simply cannot afford to miss our chance to lead the technological revolution we are experiencing in the connectivity sector and design it as a European revolution.