Europe's economy needs to use its IT and comms investments in much smarter ways if technological developments are to help economic recovery, says Nick White.
Business users feel particularly frustrated by the present competitive environment that exists in retail consumer markets, notably in mobile. However, the same is not true for businesses trying to operate across borders, or even in multiple sites within one country.
That problem affects not just large businesses, but the growing band of smaller organisations that are vital to economic recovery. Today, Europe is a fragmented patchwork of national and sub-national networks. Why is this?
One reason is that regulators assess competition solely through national consumer markets. The outcome is a near-impossible challenge for international fixed and wireless network providers trying to serve multinational clients. It also builds in inefficiency in customers' transnational business processes because of the lack of seamless networks.
Is there hope for the future? The European Commission's much publicised Next Generation Access (NGA) Recommendation, version 2, should be a once-in-a-generation opportunity to join up Europe.
Unfortunately, though, it appears that the reverse may be achieved, spelling the death of access competition. Providing access to others actually enables greater demand and lowers risk. Yet paradoxically, incumbents believe they can reduce risk by limiting access to their own wholesale and retail operations.
Consequently, in response to special pleading from former monopoly incumbents, the EC's most recent draft of 12 June enables re-monopolisation.
The commission has issued proceedings against Germany and Spain for granting 'regulatory holidays', even though the wording of the draft provides loopholes for national telecoms regulators to make such concessions without objection. An incumbent making a 'co-operative arrangement' with one other operator is exempt from cost-orientation and anti-discrimination provisions.
The NGA draft recommendation is an extraordinary U-turn by the commission. It seems to be a unilateral rewriting of competition law in the sector, in direct contravention of Article 82 of the EU Treaty.
Business users are the constituency that will determine the success or failure of NGA investment. It is the use of IT and comms by businesses that generates consumer services, content and applications. It is use by businesses that drives demand through new processes and efficiencies.
New social and economic welfare comes not just from the tech sector, albeit an important three percent of GDP does, but more significantly from the value added by business supply chains using such technology, which represents 35 percent of GDP.
Political assessment of NGA investment must consider the indirect social and economic welfare benefits in education, health, social services, manufacturing, transport, finance and entertainment.
Government technology is often fragmented inefficiently between departmental silos. That disjointed approach blocks efficiencies between networks and information, and duplicates operational costs, thus increasing government spending unnecessarily.
It is an approach that also results in inefficiency for many companies involved with public-service contracts. A study of operator supply and corporate demand for access indicated a potential benefit of between 1.6 and two percent GDP from open access on an equivalent non-discriminatory basis.
New fibre networks present a big investment challenge, but they are key to Europe's economic recovery. Investment risk can be managed best by enabling businesses to stimulate consumer demand, generating benefits across the whole economy.
For that to happen, however, efficient business investment in IT and comms must be facilitated, which will result in the business market acting as customers, generating services, applications, devices and content.
What do businesses require to do this? They need open access to seamless, multi-site, high-quality services, as well as business-differentiated offers, for example, with resilience, low latency, low contention ratios, and symmetric and asymmetric bandwidth.
A recent study of smaller companies showed their upload bandwidth actually exceeded that of their downloads — requiring a new customer proposition. They also generate very high volumes of small transaction packets, requiring different techniques for optimising performance.
Businesses need any-to-any connectivity at each horizontal layer, as the make-up of their organisations change with acquisitions, disposals and new partnering arrangements. Therefore, their networks must be enabled for, not disconnected from, end-to-end access.
Variable, extended supply chains must be able to access any application, content, service or device. They must not have vertically integrated lock-ins denying equivalent access or scope.
Denial of open access
Businesses would be hit severely by denial of open access to next-generation fibre networks, since their service providers will either be unable to obtain next-generation access infrastructure, or will only be able to obtain it on non-competitive and discriminatory terms.
Those restrictions will create fragmentation and force businesses into direct local arrangements with incumbent operators at higher cost and lower service levels, imposing a tax on cross-border trade and blocking efficient business processes that aim to generate jobs, productivity and economic growth.
Businesses must be certain that their service provider can get access on the best competitive terms anywhere, without restrictions on devices, content, services or applications.
That is the best way to generate fibre investment for Europe's recovery through growth, productivity and jobs. The EC's proposals on access to next-generation fibre networks must deliver this key objective.
Nick White is executive vice-president of the International Telecommunications Users Group and a Communications Management Association strategic board member. He has spent more than 35 years in international telecoms, having worked for various multinationals, including Reuters, Midland Bank and Unilever. White is now an independent consultant in telecoms regulatory affairs, representing user interests at national and international level.