As 5G battle looms, EU regulators head for the high ground
14 March 2017. By Magnus Franklin.
Hyperbole and fierce lobbying have become the new normal in the telecom business, as EU policymakers prepare to tackle a slew of hot topics.
Superfast wireless technology, net neutrality, telecom network investments and deregulation are all on the legislative agenda in 2018, and vested interests are set to throw their weight around.
At the center of this fracas stands an unlikely coalition of the telecom operators and EU officials, who have seized on the next generation of mobile-phone standards, 5G, as a way to revive Europe's economy and technological leadership role.
But Europe's national telecom regulators and their umbrella group are watching the lobbying storm under a leadership that refuses to buy into the hype.
The more telecom operators tell lawmakers that Europe risks going to hell in a handset unless it makes haste to save their industry, the more the Body of European Regulators for Electronic Communications endeavors to present itself as a trusted voice of reason in a business crucial the EU's digital future.
For evidence, look no further than two back-to-back speeches this past week by Berec's current chairman, Sébastien Soriano, and Johannes Gungl, who will take the reins of the group in 2018.
Both sought to position Berec as an evenhanded arbitrator in an industry often torn between the conflicting demands of consumers, shareholders, EU officials and national governments keen to cash in on spectrum auctions.
And both went out of their way to present a common front on legislative changes that will shape technology in the 2020s.
Start with Soriano, who doubles as the chairman of the French telecom authority. His speech took aim at a paper on 5G prepared by the wireless industry and published by the European Commission.
"Last year, some market players issued a strange document, 'the 5G manifesto'," Soriano told reporters during a briefing in Brussels. "The conclusion of the document was, 'We are ready to invest in 5G only if Berec withdraws its guidance document on net neutrality.' "
"This is a bit weird," he said. "I thought [industry] was investing because of business considerations and competition, not only [because of] regulation."
The message was clear: Europe's national telecom regulators see themselves as authoritative advisers who can help legislators cut through the hype and focus on the underlying reality, as Gungl said in his speech an hour later.
"The role of regulators and Berec is to clear up the fog, and be the voice of common sense," the Austrian told an audience of regulators and industry insiders attending a cable-industry conference* in Brussels.
That clarity and common sense will be essential under EU plans to hand national telecom regulators more power as part of an upcoming overhaul the industry's rulebook.
Age of reason
Berec is riding a wave of newfound confidence, after emerging from its difficult "teenage" phase, when it went head to head with EU officials over the direction of EU telecom policy.
The umbrella group not only survived its adolescence but learned important lessons on how to open up its once closed shop to views from industry and civil-liberties activists.
These days, Berec is winning its battles with less fanfare. Most recently, it appears to have thwarted a bid by the European Commission to upgrade the group into a full-blown EU agency, which would have seen Berec absorbed into the EU's institutional framework.
Soriano is spending his year as the head of Berec on laying the groundwork for new legislation that will set the ground rules for telecom operators, tech companies and online services in the decade to come. But 2018 could see Berec taking on a more politicized role.
Gungl, the Austrian regulator elected by his peers to lead Berec starting next January, echoed Soriano's warning about the hype surrounding 5G.
"The Austrian government fell in love with 5G, whatever 5G is," he said. "I don't see the convincing, compelling application so far, and . . . it reminds me of the 3G hype."
The reference to 3G would have resonated with the audience, given that it remains a painful memory for the industry.
The EU led the world on rolling out 3G networks from 2005 to 2008. But that leadership came at a cost. Inflated auction fees prompted by the hype over the commercial potential of 3G left operators nursing their balance sheets for a decade.
In the UK alone, the 3G license auction in 2000 raised 22.5 billion pounds ($27.4 billion) for government coffers. Operators spent billions more luring customers by giving away handsets and building the network.
The expense left industry players with empty pockets, forcing them to milk as much money as they could from 3G and delaying the introduction of 4G.
Gungl warned that 5G faces a similar fate.
"There is a lot of talk and hype," he said, outlining his planned approach for when he takes over the Berec chairmanship.
"What is 5G? What is the impact on competition? What is the impact on net neutrality, and is there a contradiction between the two?" he asked.
"This is one thing we will focus on next year in the Berec work program," Gungl said. "We want to . . . bring a little light into the darkness and separate hype from reality."
Competition and investment
The Austrian regulator also took aim at a linchpin of the updated EU telecom rules: a push to boost network investments.
"Our main task is to drive competition, and the main paradigm is that competition drives efficient investment," Gungl said, saying he would be "reluctant" to endorse the view that regulation should play a different role when it comes to incentivizing investments in superfast broadband.
Yet Gungl's stated goal of becoming the voice of reason hinges on the ability of Berec's members to keep their cool. That is likely to be put to the test soon.
EU net-neutrality rules meant to ensure telecom operators treat all Internet traffic equally are among the most politically explosive policy initiatives in the technology arena. In their efforts to bring the regulation to life, national authorities will lean heavily on Berec to provide a sober view of the law and its effects.
This role as a neutral observer, rather than an interested party, is the thrust of the Soriano-Gungl approach. The challenge for Berec will be to sell its above-the-fray posture to lawmakers and industry players.
It will take more than lofty speeches to fill that tall order.
* Cable Europe's "Cable Congress 2017," Brussels, March 8 and 9, 2017