Neelie Kroes: Unblocking the broadband bottleneck

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Today Europe faces the human consequences of crisis. Our citizens, especially our young people, are haunted by horrific prospects of unemployment. To tackle this, we need growth. Growth to stabilise public budgets, growth to provide jobs for those young people, growth to guarantee our high living standards. All our actions must take that context into account.

And if we are to fuel our economic future, we must invest in innovation. That means ICT: which both drives innovation and enables it.

But today, Internet networks are getting busier and more clogged. Internet traffic is doubling every two to three years. The increasing choice of on-demand services can mean multiple claims on available bandwidth; even within the same household.

Our broadband objectives are economically essential. But, it’s clear they will need significant investment.

How do we achieve that investment? Well, I know some ways we won’t achieve it.

Some have argued that for investment to happen we need to reverse the regulatory successes of the past decade.

They claim we should grant operators a regulatory holiday. Whether it’s by allowing the re-monopolisation of fibre networks rolled out by dominant players. Or whether it’s by letting mobile operators charge disproportionate termination rates or extortionate roaming tariffs, tariffs unrelated to underlying costs. They want a “holiday”—from the stress of innovating in a competitive market—and a return to an “idyllic” business environment sheltered from real competition.

This is not the right way forward.

Remember, once, there were some industry players who thought the networks for telephones and later broadband were their unique stronghold. Remember that disruptive competition disturbed their complacency. And remember that the resulting market momentum ultimately meant better results for everyone. Because it made all parts of the industry focus on their customers’ needs, and look ahead to the future, delivering better and cheaper services for the benefit of European consumers.

We need to learn from that. The answer is more consumer choice, not less: promoting competition and innovation, not stifling it.

Of course, anyone in my position will be heavily lobbied, and all sorts of arguments will be alleged about tempting “shortcuts” in the other direction. But I deeply believe in competition: it has delivered innovation and investment in the past; it will do so in the future.

And that means competition that is real and effective. Because it’s not enough just to let different retailers rebrand and resell wholesale products that are all, fundamentally, the same.

Rather, we should open up markets to the maximum extent possible, stimulate competition in every link of the chain, and deliver the maximum possible consumer choice; the maximum possible market opportunity.

This applies to the fixed network of dominant operators, where we should allow alternative operators to deploy their own equipment and provide innovative and competitive services. And this on the basis of effective unbundled access, at a fair price and on non-discriminatory terms. Because that is also a form of platform competition!

But you know, I often find it ironic when people criticise our pro-competitive regulation, and caricature it as merely enabling resellers to free-ride on others’ investment. Because it’s often the very same people who also lobby to take away obligations on dominant players to unbundle. And thus to remove a key enabler of competitive investment in the broadband value chain, limiting it to bitstream “resellers”. But ladies and gentlemen, I don’t believe in “managed competition” with dominant players. No more than I believe in “managed democracy”! Here to read more.

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