FEATURE CARRIER FOCUS


Time for change I


Revamped regulation is crucial to curb dwindling revenues among European operators – but, Rebecca Pool asks, will reform reach the industry in time?


t’s no secret that, compared to the rest of the developed world, the European telecoms sector is in bad shape. A decade ago, the continent’s thriving communications market was the envy


of Asia and North America, with its nations pioneering the technologies that formed the backbone of the digital economy. But 2014 is a very different story. Despite huge growth in internet traffic across


Teliasonera’s Freenasp Mobedjina urges more


predictable regulation to boost invesment in telecoms across Europe


fixed broadband and of, course, wireless connections, revenue is stalling. Te European Telecommunications Network Operator’s Association (ETNO) forecasts revenues from fixed network services across Europe will decrease by around two per cent annually between now and 2020, in stark contrast to the rest of the world, which can expect continuing revenue growth. And it’s not just revenue; industry now widely


recognises that investments in European telecommunications infrastructure are dwindling. ETNO states that investments have declined by some two per cent a year in the past five years, while the money ploughed into other


Many European operators have seen negative returns for shareholders over the last few years. The same cannot be said for international players [BCG - ETNO 2013 ]


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international markets has risen by the same rate, across the same time period (see Figure 1 and Falling European operator returns). As Europe’s consumers experience slower


connections than US and Asia-based customers, economic growth could stall leaving the continent playing catch-up in more than just the telecoms industries. So what’s the driving force for Europe’s woes? In short: inconsistent, distorted and outdated regulation. ‘Networks and the competitive situation differ


a lot between member states in Europe, so it isn’t possible to implement the same regulatory set-up – including regulated products, obligations and cost models – in all European countries,’ says Freenasp Mobedjina, vice president of strategy and business development for broadband services at Sweden’s largest operator, TeliaSonera. ‘But any uncertainty and lack of predictability has a significant negative impact on investments in infrastructure. Operators badly require stability and long-term rules.’ As Mobedjina highlights, regulation across


Europe has historically focused on creating competition in existing networks without encouraging operator investment in new networks. Two key priorities have been to reduce end-user prices and incumbent market share, with policy makers only focusing on investment in the last five years. ‘As you can imagine, measures designed to


encourage the [original] priorities, don’t necessarily deliver the third,’ he says. But regulatory change, to encourage


investment, is now critical. For example, deployment of infrastructure needs to take place well beyond urban regions, where the potential customer-base is lower. And in Mobedjina’s words: ‘It is now extremely important to create a less complex and more predictable regulatory environment to boost investment in [such] infrastructure.’ Pat Galvin, director of regulation and public


affairs at Eircom, the largest telecommunications provider in the Republic of Ireland, concurs and emphasises that the root cause behind regulatory


18 FIBRE SYSTEMS Issue 3 • Spring 2014


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