Ways to speed up the deployment of very high capacity European networks

Features

Among other things, CERRE recommends the competitive use of networks by different players – rather than focusing on competition between network owners – to lower entry barriers.

Authors Tony Shortall, Professor Marc Bourreau and Winston Maxwell from the think tank Centre on Regulation in Europe (CERRE) have published recommendations to boost the deployment of much needed very high capacity networks (VHCN) in Europe.

The reached their conclusions based on analysis of the current European Union regualtory frameworks. Infrastructure sharing is key, but they also call on European policy makers to deliver an updated, better aligned policy and regulatory framework that streamlines measures with policy objectives.

They have identified the need for cooperation within and beyond the telecom sector to speed up deployment of fixed and mobile .

COVID-19 adds urgency

The swift deployment of fixed and mobile networks is a top priority for the European Commission. To achieve Europe’s connectivity objectives, but substantial network investments are needed. The COVID-19 pandemic has only increased this urgency.

Competitive entry and lowering entry barriers should be a priority, which means ensuring access to infrastructure and infrastructure sharing. There are many mechanisms already available, but some need to be revised to ensure they are not counterproductive.

The report confirms that in most cases, infrastructure sharing leads to lower costs for operators and can encourage more investment and facilitate competitive entry. The danger is that it could reduce competition through the effects of coordination like information sharing or unilateral effects. In addition, lowering entry barriers by sharing passive elements seems a universally positive measure to stimulate investment.

The authors flag that there are significant differences between the regimes in place across Europe for fixed versus mobile network sharing and co-investment. There are differing institutional structures, so operators must navigate two regulatory pathways.

Shortfall notes, “Network sharing in a fixed context is generally governed by telecom regulation and regulators, network sharing for mobile is generally governed by competition law and competition authorities.

“Yet, the deployment of fibre networks and mobile 5G is interdependent. One can wonder whether this uncoordinated framework prevents costs efficiencies.”

More unitifed framework

The CERRE report authors call for more unified policy framework, covering both fixed and mobile network sharing, highlighting the fact that within the European Commission, DG Competition and DG Connect have not aligned their policy objectives and regulatory provisions, which risks confusing markets.

This could be resolved through closer collaboration. The report also shows that much of Europe’s regulatory framework is outdated and that measures are not streamlined with Europe’s connectivity objectives.

The wholesale-only factor

Finally, the report confirms wholesale-only operators have been effective entrants in many European markets, stimulating a positive investment dynamic.

However, the authors warn there is a risk of “investment coordination” and “investment hold-out” when it comes to the next wave of network investments. If the competitive response to wholesale-only players is for the whole market to separate structurally, this threatens innovation and efficiency in the medium term that national regulatory authorities must guard against.

Given the wholesale only players’ potential to revive declining VHCN markets, the authors are keen to promote them, but only where other types of infrastructure-based operators are present within the ecosystem to mitigate medium-term risks.

“Telecom networks are in the midst of a vast transition. The profound impact these changes will have on the sector demand fundamental changes to regulation. Given technological progress and the impact of the COVID-19 pandemic, the continued development of networks and network functionality will be central to the success of the European economy”, conclude the authors.

You can access the report here.