EC Floats Ideas to Spur the Digital Single Market, but Is Fair Share Dead?

The EU's connectivity infrastructure isn't ready for the challenges of the digital society and needs revamping, the European Commission said in a white paper published Wednesday. Among other problems, it said, is that some electronic communications rules aren't working well, making completion of the digital single market difficult. The digital single market seeks to end national barriers to online transactions, building on the EU internal market. A long-running dispute over whether content providers should pay telcos a "fair share" to use their networks will apparently extend into the next EC, stakeholders and observers said.

One of the main objectives of the European Electronic Communications Code (EECC) is promoting connectivity through a regulatory framework conducive to increasing investment in very high-capacity networks, the paper noted. But the results of some rules "have not been satisfactory." This has caused delays in rollout of the fiber and stand-alone 5G networks needed for Europe's Digital Decade, the EC said.

The paper addresses three policy areas: Creating the "connected collaborative computing" network; building secure and resilient digital infrastructures for Europe; and completing the digital single market. One possible scenario to improve the latter could be addressing the converged e-communications connectivity and services sector by broadening the scope and objectives of current regulations to ensure a level playing field for all actors and end-users of digital networks where appropriate, the EC said.

To tackle technological and market developments, the EC said it might consider introducing measures to accelerate switch-off of copper networks and proposing a European wholesale access product for fiber networks. The EC is also considering, among other ideas, integrating spectrum governance at the EU level to allow for greater harmonization of spectrum authorization processes to create market scale for pan-EU telcos; and aligning spectrum authorization for terrestrial and satellite communications.

Does the paper foreclose further debate on fair share? The issue "looks politically closed, however there are some 'poison pills' which may be eventually used to re-open the debate in case the new commission will still be interested," telecom consultant Innocenzo Genna said in an email. Among these is a comment about the "vivid debate" on whether regulators or courts should intervene in contractual relationships between market actors, he noted. There have been few such cases but if they increase, "policy measures could be envisaged to ensure swift resolution of disputes," the EC said.

Mobile and network operators continued to push for fair contributions. Revising spectrum policy to speed deployment of advanced mobile connectivity, recognizing the need for scale to avoid market fragmentation, developing finance mechanisms for faster deployment of next-generation networks, and allowing telcos to negotiate fair terms for the service provided to Big Tech, among other things, "should form the basis for the new approach," GSMA said.

Pro-investment rules for telcos must address only proven market failures and competition concerns, said the European Telecommunications Network Operators Association. In addition, measures recognizing the role of tech companies in connectivity must ensure fairness in the ecosystem, the association said.

"Parts of the paper could serve as a favour for incumbent telecom operators who want to resurrect their rejected ask for network fees in a different shape or form in the future," warned the Computer & Communications Industry Association Europe. As telcos continue to press for "fair share" payments from content providers, the white paper, rather than being the end of a long road for this EC's dialogue on connectivity, "is likely to be followed by a lobbying frenzy."

The paper "looks like a nice farewell greeting" from the current EC, telecom consultant John Strand said in an email. It "admits that the problems that existed when [the current five-year EC term began in 2019] are still there, and they have actually grown in the intervening period. This is a market that has become more complex [with the introduction of cloud computing, AI and so on] and where American and Chinese companies increasingly dominate the market. The sins committed when the market was not so complex do not make it easier and cheaper to solve the problems today and in the future."

This EC's legacy on the telecom side "will be that they were good at identifying and describing the challenges, but they did not have the skills to solve those challenges," Strand added. Comments on the paper are due June 30.