Neelie Kroes fears tailbacks on the digital highway will become a daily occurrence if investment continues to lag behind.
‘Prize fighters are ripping open the telecom market’, I read the other day.
Europe is now profiting from a consistent, long-term policy put in place by national regulators: low prices, more transparency and more competitiveness.
But what is a good deal at a fair price today could be obsolete and worthless tomorrow. Competition based on old fashioned earnings models is putting so much pressure on profit margins that investment in fast mobile and internet services is falling by the wayside.
The present earnings models, based on calls and text messages, are unsustainable and are being overtaken left and right by free services such as WhatsApp and Skype. Dumping tariffs is no more than bailing out a rickety boat. Charging clients five times as much if they exceed their package is not the answer either. Charge extra and people will leave in droves. Standing still equals going backwards in this sector.
Telecom is the cornerstone of the digital economy. We are on the verge of great social developments which not only depend on the speed, safety and accessibility of the internet but also on the quality of the services on offer.
Without investment the internet will become slower, services inaccessible and innovation an afterthought. Operating behind national frontiers is saddling Europe with a huge competitive disadvantage which is prejudicial to the interests of both businesses and consumers.
European businesses and consumers should have the same scale benefits as in the United States or China so they can deliver and buy services without paying for the privilege of crossing national borders. That is the way to stimulate growth in the telecom sector and strengthen competitive and innovative clout. At the same time consumers would get a fair deal. It will stimulate investment and yield an annual extra growth of 0,9 % GDP in Europe.
At the moment Europe has 27 sets of rules and regulations. A company wanting to do business here needs 27 keys to the same door. This is a ridiculous state of affairs.
To govern is to anticipate and we need action before it is too late. The clock is ticking.
We need structural change to make the European telecom market future-proof. It’s simple: either we sink with the ship, taking the passengers – innovative entrepreneurs and consumers – with us or we show some courage and take the necessary steps to establish a strong European telecom market. Let’s make it happen!
Neelie Kroes is Euro commissioner for the Digital Agenda.
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