LETTER TO THE MEMBER STATES

Brussels, 10 October 2017            

 
Dear Prime Minister,

Dear Minister for Electronic Communications,

Dear Permanent Representative,

Why competition must not be traded off for investment:  
A plea for the future of electronic communications

Just a decade ago, digital mobility and Internet broadband access were far from being as widespread as they are today. And usage was even more limited. Indeed, it was around that time that talk of fibre-based networks first gained currency at EU level, in the context of the first review of the EU regulatory framework for electronic communications.

It has been little more than one year that your government started negotiating the second review of this framework, after the European Commission published its proposal for a European Electronic Communications Code.

We and our companies have all accompanied the development of the regulatory framework for the more than 10 years between the 2006 review and the 2016 proposal. And many of us were already active in the sector before that framework was enacted, several even at the time when full liberalisation arrived on 1 January 1998.

For twenty years, competition in electronic communications has thus been the greatest enabler of innovation, choice and benefits for businesses, authorities and citizens across all parts of society and the wider economy alike.

For the first time in the history of the single market project, we today face a situation in which the European institutions appear dangerously close to undermining the competitive fabric of electronic communications in the EU.

As CEOs and as competitors, we are deeply concerned by this development.

In a speech on 27 September 2017, the Commissioner responsible for Digital Economy and Society articulated a vision according to which all citizens and industries should enjoy full connectivity at a competitive price.[1]

This vision is one that reflects the DNA of our companies – so why are we concerned?

The root cause of our concern is the proposal, inherent to the European Electronic Communications Code, to trade off competition for investment.

However, there is no way that this approach can produce positive results: it is antithetical to both business logic and established law and policy.

For a business, the strongest (and ultimately sole) incentive to invest is competitive pressure. Since the electronic communications industry traditionally lacked competition, EU law and policy set out to open markets and create competition. The last step in this process was the first review of the regulatory framework. Competition today is neither universal, nor universally effective. You therefore have to make sure that the second review does not mark the premature end of the incentive to compete.

But precisely this will happen if companies who still dominate their domestic markets, and in a number of cases also those of other Member States, are now offered a loophole through which to escape from regulation. Although co-investment may have merits, it is not a magic formula, and the Commission proposal as well as its revision by the Estonian Presidency in our view lack focus and adequate competitive safeguards to ensure that citizens, SMEs and society at large are not held hostage by the same operators who historically always have opposed competition.

We are behind President Juncker`s vision of a Connected Digital Single Market. We are behind your government`s ambition to provide society and economy with future-proof connectivity. We have invested, and will continue to invest, at rates often above those of the former monopolists, in services and in infrastructure and thereby prompt further investment.

But the path ahead must not ignore the realities of market power. Tying the hands of the national regulatory authorities is not the answer; preserving the integrity of and updating the rules on significant market power in a way that strengthens competition, is.

You can ensure that the future regulatory framework remains free of anti-competitive lacunae,  and that your digital policies remain thoroughly pro-competitive. If you do, we can work together to deliver EU citizens, SMEs, public authorities and societies at large with best-in-class connectivity at competitive prices.

This is our commitment. We count on yours – and remain available for any questions you may have.

Yours sincerely,

[1] http://europa.eu/rapid/press-release_SPEECH-17-3523_en.htm.