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An EU report published this week by ex-Italian Prime Minster Enrico Letta has urged the telecoms industry to consolidate, to increase its global competition potential
The report, titled ‘Much More Than a Market – Empowering the Single Market to deliver a sustainable future and prosperity for all EU Citizens”, sets out ideas to build a stronger economy that can compete more effectively on a global scale. Letta was tasked by Europe’s leaders to assess the failures of Europe’s single market, and the reports findings are to be presented today to the European Council, after a press conference held yesterday.
Multiple industries were singled out in the report, including finance, energy, retail, telecoms, health, agrifood. The European telecoms market in particular was highlighted for its notable fragmentation. According to the report, the EU is comprised of 27 different national communications markets that each service an average of five million customers, compared to 107 million in the US and 467 million in China.
It advocates for increased unity and harmonisation of national telecom regulations in the EU and a new cross-European regulatory body to oversee the telco sector.
Although the report notes that the pro-competitive nature of the European regulation invites new market entrants and benefits the end consumer in terms of price, the ‘excessive’ market entry by ‘small-scale, territorially focused operators”, keeping this focus “would be detrimental for a technology switch towards advanced networks that require massive investments.”
Only with increased scale can European telcos achieve the cost savings and levels of innovation needed to build critical digital infrastructure and develop new services like edge computing and the IoT, the report said.
Europe’s mobile operators have been arguing similar points for years through their lobbying group ETNO. The group has long argued that the competitive nature of the EU market, although it is good for consumers, has left operators in a financially weak position with little resources for additional investments.
“The lack of integration in the financial, energy, and electronic communications sectors is a primary reason for Europe’s declining competitiveness,” read the report.
“There is an urgent need to catch up and strengthen the Single Market dimension for financial services, energy, and electronic Communications”.
This is essential for Europe to compete with the likes of China, the US and India. “By identifying the European one as the relevant market, we can finally enable market forces to drive consolidation and growth in scale.”
The primary objective of the consolidation is to promote growth and investment attractiveness for European operators. The report notes that “Europe must leverage the strengths of a unified telecommunications market and prioritise incentivising the necessary investments to bridge its growing connectivity investment gap.”
Since the release of the report, Telefonica has expressed its support of it, particularly the “consideration of the telecommunications sector as one of the strategic levers for competitiveness, innovation, citizens’ well-being and the EU’s resilience, especially in terms of cybersecurity.”
The report states that its contents ‘aim to inspire a genuine call to action among the European public opinion.” Once discussions on the report have been held, the European elections from 6-9 June will help decide on the adoption of the reports’ outlined steps.
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