European Telcos Seek More Cooperation With OTTs, Under Same Rules

Collaboration between traditional telcos and over-the-top players is key to boosting European innovation and investment, and both sectors must play by the same rules, said industry and European Commission (EC) representatives Tuesday at a webcast Brussels conference held by the Financial Times and European Telecommunications Network Operators' Association.

The EC recently floated a proposal for revamped telecom rules (see 1609140010) that aims to give gigabit access to the main socioeconomic drivers; provide access to all houses to 100 Mbps internet services; and cover all urban areas and main transport platforms with 4G by 2025. The proposal also says at least one major city in each member country should have commercial services based on 5G by 2020. Reaching those goals will require an investment of 500 billion euros (about $560 billion) that, under the current regulatory environment, won't happen, said EC Vice-President for the Digital Single Market Andrus Ansip.

EC Digital Economy and Society Commissioner Günther Oettinger noted the difference between incumbents and OTTs, saying social media companies, which are mostly not European, are offering similar services to telcos but aren't subject to the same rules. They should be included in EU data protection and other regulations, which is what the reform package proposes, he said. He urged telcos, when they return home and meet with government officials, to "please push them" to approve the telecom package without delay.

With the line between telcos and other services blurring, companies need an environment in which to test new services, said Carlo d'Asaro Biondo, Google president EMEA-strategic relationships. That requires cooperation between the two sectors, which policymakers must promote, he said. Google isn't looking to bring Google Fiber to Europe, said Biondo, saying he sees the company's role not as a network operator but as an investor in data centers and facilitator of network operators' loads.

Asked if telcos are too big to innovate, CEO Gavin Patterson said his BT Group has reinvented itself many times over its long history. The key is to focus on customers and to move as their demand moves, and to see innovation as the lifeblood of the company, he said. Instead of trying to invent things themselves, telcos should use their R&D capabilities to work with the best of industry on co-inventions, he said.

There must be synergies with other industries such as OTTs, and all must be subject to the same rules, said Telecom Italia Executive Chairman Giuseppe Recchi. Every large telecom provider works collaboratively with universities and other bodies to foster innovation, but that should begin internally, he said: Companies must change their legacy "elephant" into a "hungry grizzly."

Telecom companies and investors also praised the EC proposal for spectrum management changes, which includes calls for licenses of a minimum of 25 years and more coordination on spectrum allocations. This isn't the first time the EC has proposed spectrum management overhaul, which has been controversial among EU governments, but this time is different, said Roberto Viola, DG Connect director general. He said the EC's relationship with the Body of European Regulators of Electronic Communications has matured, and BEREC's initial reaction is "not negative."

The proposal seeks more predictability in the system, Viola said. That's the right approach because it's not about central management of spectrum, he said. Allocation decisions will be made by national administrations, which can coordinate if they wish, he said.

Europe needs to define common policies for raw materials like spectrum, said Gervais Pellissier, Orange deputy CEO and executive director of European operations. Orange believes the proposal is a "good first alignment," he said. The proposal to grant 25-year licenses will correct part of the valuation difference between U.S. and European operators, he said.

It's a huge plus for U.S. telcos that they own their spectrum and investors know the resource won't be taken away from them, said Roger Wilkinson, Newton Investment Management investment leader-global research. Twenty-five-year grants will be a decent start, he said. Henrik Nyblom, Schroders Investment Management equity analyst, warned against thinking that the U.S. is a "promised land" because there's spectrum hoarding. The EC's proposed term will provide some protection against hoarding, he said.