Big Telco good, Big Tech bad
EU digital and competition commissioner Margrethe Vestager has said a single European telecoms market with five mobile operators for 27 countries is the only way to guarantee a return on investment for telcos. Europe’s hopes of keeping pace with the global technology industry rely on its telecoms companies, Vestager said. The apparent contradiction of a competition commissioner advocating for an oligopoly came in an interview Vestager gave to Italy’s Milano Finanza. Meanwhile, the EU has expedited competition board approval of a joint venture between Europe’s four biggest operators.
In the article, spotted by Capacity editor Alan Burkitt-Gray, Vestager argued that the single European telecoms market is the only way to create the conditions to guarantee a return on investment for telcos. The alternative, excess competition, has catalysed price deflationary reactions. In Australia the entry price for a data package is €30 for 40 GB of traffic, but Italian consumers are getting the same allowance for €5.
The fact that Italians are getting data for a sixth of the price is not to be celebrated for empowering to society, easing access to health services and stimulating the economy but lamented for making it harder for telcos to build standalone 5G networks. “Investments are now at risk everywhere,” said Vestager. The Commissioner said she wants licence revenues to be managed centrally, by the EU, with mechanisms that would deprive states of a part of the revenue. Continental consolidation is needed too.
This will have significant consequences for employment in certain countries, while other countries will benefit from the concentration of power. “There is no other way, except to pass on the burden of investment to public taxation,” Vestager told Milano Finanza, “the alternative is Europe’s progressive technological decline.”
Meanwhile in other EU regulation news, Reuters has reported that four of the biggest European mobile operators are to have a major new joint venture rubber stamped. The scheme could concentrate much of the revenue from future mobile operations into the hands of four major operators.
Deutsche Telekom, Orange, Telefonica and Vodafone’s plans to form an advertising joint venture is set to win unconditional EU antitrust approval, according to Reuters own ‘sources familiar with the subject’. The joint venture marks the telecoms sector’s first attempt to take on Meta and Alphabet’s Google in the lucrative online advertising sector and diversify their revenue streams.
Google makes about 80% of its revenue from online advertising and telecoms operators have not been able to recoup any of the investment in infrastructure that provider the lucrative trade route for ‘over the top’ content publishers exploit. The European Commission is scheduled to decide on the deal by February 10 after its preliminary review.