The currently hot topic in electronic communication in Europe is the EU Commission’s proposal for a Telecoms Single Market covering a wide area from consumer issues, single authorization, a common approach to spectrum allocation and the introduction of VULA (Virtual Unbundled Local Access). The head of the Swedish NRA (PTS) held the key note speech at the conference and underscored that there is already a single digital market and that is the internet, and operators need to improve competiveness in order to be the operators of the future. But there were unfortunately only a few operators present at the conference which was dominated by researchers, consultants, regulators, and other interested parties. The conference covered a broad range of issues that is relevant for the electronic communications industry.
I would like to highlight three factors that were prevalent at the conference. Firstly, spectrum continue to be in focus and it concerns allocation mechanisms, how to share the scarce resource, how to release more spectrum in order to enhance capacity. Secondly, the integration of fixed and mobile communication, which is underscored by the massive off-load of data traffic from mobile smartphones to wifi and that fiber is required to solve the bottle necks in backhaul to mobile base stations, and enabling the mobile data boom. Thirdly, the regulatory aspect is one way or the other present in most papers, with relevance for spectrum allocation, unbundling of local access, net neutrality altogether indicating that it will take a long time before ex ante regulation will be withdrawn from the sector of electronic communication.
I did two contributions to the conference. The first one concerns the extensive deployment of fiber networks in Sweden which have been carried out by city urban networks. Almost 50% of the Swedish households have the possibility to get connected through fiber and a large portion of the fiber networks have been deployed by the 180 city urban networks that are predominately owned by municipalities in Sweden, implying that public money has played a significant role in the deployment of fiber. The second contribution concerns the role of network sharing in transforming the operator business, and the impact on profitability and competition. Passive network sharing is a global phenomenon, and in some markets are dedicated tower companies evolving enabling network operators to release capital by selling their towers. Active network sharing is rarer, but it is emerging as it is a form of “soft” consolidation enabling operators to reduce opex as well as capex. Despite an extensive usage of network sharing – where competitors are collaborating – competition on the retail market prevails. A potential spillover from network collaboration on the downstream market is a risk, and a factor that competition authorities are monitoring very closely.