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Communications ‘should be top issue for politicians’
13 June 2012
Top politicians came together at the Global Telecoms Business Innovation Summit 2012 to say what they can do to stimulate investment in the networks that will enable economic recovery and drive innovation
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EU
Ofcom
investment
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George Malim reports
The panel
Stephanie Liston, senior counsel at Charles Russell and former board member of UK regulator Ofcom chaired the panel;
Stephen Carter, former UK minister for communications, technology and broadcasting; now executive vice president of Alcatel-Lucent and president of its EMEA region;
Richard Hooper, chairman of the Broadband Stakeholders Group, former chairman of the Radio Authority and deputy chairman of Ofcom;
Suvi Lindén, former Finnish minister of communications, now special envoy to the Broadband Commission;
Chi Onwurah, MP for Newcastle Central in the UK parliament and shadow minister for innovations, science and digital infrastructure; former head of telecoms technology at Ofcom
Left to right: Stephanie Liston, Richard Hooper, Chi Onwurah MP
All pictures: Steven Hughes
As a short term return to economic growth seems unlikely are infrastructure sharing approaches such as Vodafone and O2’s in the UK the best way forward? How much consolidation should regulators be prepared to accept?
Stephen Carter: I’ll try and answer the question I think you’re asking. At a binary level in regulation I think you have to decide when you are pushed into a corner whether you incline towards consumer protection or inward investment. If we observe Europe as a whole, the regulators are out of step with the industry somewhere between a bit and a lot. That imbalance needs addressing. Europe is the location with the least capital investment in fibre and wireless if you look at the rest of the world. You can argue that other parts of the world are leaping technological generation but Europe is not at the top of the tree when it comes to operators’ priorities.
Richard Hooper: There are two answers. One goes down the route of net neutrality and the other involves structural separation. Operators are not allowed to charge differentially to people on the edge such as YouTube or the BBC and it is bizarre that people in the centre of the network don’t feel able to charge people. The other thought is the future direction of the incumbent. In Australia, Singapore and New Zealand, you are moving towards the notion that the basic layer is going to be a monopoly so you probably need structural separation.
Left to right: Suvi Lindén, Stephen Carter
Regulation is still trying hanging on to driving competition in the face of the economics. We’re ending up with the worst of all possible worlds in the UK and Europe. We’ve barely got 3G — and 75% of fibre to the home is in Asia not Europe — so what practical steps, particularly in the UK, can be made that have direct relationship to government policies and regulators?
Chi Onwurah MP: If you ask me what the United Kingdom government could do right now to increase investment in telecoms I have a long list of things not being done. The top of that list would be a communications green paper. The mover for that isn’t to have a document but it would show a strategy for the industry that is a platform for innovation.
Hooper: I’m not interested in a process. What would your strategic plan be?
Onwurah: A timetable for more broadband by the year end as was the commitment under the last government, a commitment to deliver superfast broadband in the final third, a commitment to support the sector of digital communications and a commitment to support new market entry and innovation. The view that competition and investment are somehow contradictory is wrong.
Carter: The vision thing in communications policy won’t solve the issues but it will help. We have to make choices about where we are in the cycle of things.
Lindén: A very important issue that all governments face is the economic crisis. We’ve seen good telecoms infrastructure boost the internet economy’s growth and it should be seen in governments as a way to increase efficiency and productivity. That’s not taken very seriously at a European level because we are too wealthy so we think we don’t have to think about it carefully. It should be a number one issue in the European Commission but it seems only [European Commissioner] Neelie Kroes is working on it. In Finland we made one megabit per second broadband access a legal right two years ago. The new government is researching the possibility of raising that to ten megabits. I think it’s a very good thing to study the impact of that.
Stephanie Liston: Is broadband a right or a privilege and who pays?
Onwurah: Broadband is not a right now, nor is it a privilege either. Our position is of making it a universal broadband privilege by the end of 2012. Making something a human right is a really big step. At some point in the future broadband will become an essential but we’re not there yet.
What are European countries doing in terms of helping developing countries with broadband access?
Lindén: The Broadband Commission is a group of people from business and governments that promote broadband for developing countries. The commission was set up the UN a few years ago and the countries that have worked on their telecoms infrastructure have seen an economic boost that has provided services they never dreamed of before. A mobile phone gives you an identity which is a basic right; it’s a tool for access to information which is a human right. I think governments in developing markets do model regulation on developed countries.
Carter: Suvi is right, it is still the case that old Europe is a net exporter of policy ideas but it is changing. In oil and mineral rich markets there is capacity for large investments in infrastructure capability. That creates demand for different policy ideas. Technical innovation is creating demand for sub-$50 handsets and operators can make a meaningful return on capital at four, five or six dollars rather than $40 or $50. Another factor is that growth potential is in developing areas so, when operators choose where to invest, they get a higher rate of return than they would in Europe.
What do you think about the European Commission’s latest proposition that suggests state aid should support FTTP even when next generation access exists or is planned?
Lindén: It’s very important the European Commission is thinking about this matter. In Finland you don’t have to go very far — 5 kilometres out of a city centre — and you won’t get fast broadband. In Finland there have been movements where citizens have started to deploy fibre themselves. The question is how do we address more of the users that are not in cities or in rural areas?
Carter: One of the great joys of my life today is that I’m not deeply up on the day to day acts of the European Commission but if it is pushing people to be innovative that is a good thing. Australia, for example, has made a public policy decision to invest €25 billion to create a network for 20 million people. You have to create opportunities at a scale for private capital to come to market, without that you’re under the level of innovation that incentivises private capital.
Hooper: There’s the assumption that superfast broadband is the issue anyway. There’s little or no evidence for the benefits of superfast broadband anywhere in the world. The generations I see flowering around the world live in the mobile space so I’d prefer to spend private sector money to get everyone going and one to ten megabits and spend the rest on mobile broadband.
Carter: You only have to go to North America to see a convergence of all the things we’re talking about in Europe. The scale of investment in fixed and wireless infrastructure, leading the world in devices and being the centre of applications development means the US economy is gaining materially. US graduates, US innovators and consumers and businesses are gaining because they’re getting that multiplier effect.
Onwurah: The European Commission has always had a bias in favour of fibre and I think they’ve found a way of manifesting that bias legitimately. I’m also concerned that lack of industrial policy and new investment may make it difficult for us to stay at the forefront.
Carter: All of us our prisoners of our own experience. My experience is definitely informed by being an operator, a regulator, a telecoms minister and a vendor. My point isn’t please buy some more Node Bs — although that would be nice. It’s how do we find and fund that capability? The investment levels in wireless and fixed access, software and middleware are weighted more in other places than in Europe and we are going through a technological change of some scale — that’s worthy of a re-think. GTB
We will be posting a video report of this debate shortly