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European operators call for a new regulatory framework to build a sustainable industry


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The large European operators have once again taken advantage of the MWC’s inaugural conference to demand a new regulatory framework and clear competition rules that allow building a strong and sustainable telecommunications industry in the European Union. At the same time, they highlighted that the great challenges that the entire telecommunications sector will have to face in the coming decades are climate change, fake news and the digital divide. While the top managers of Telefónica, Deutsche Telekom and Orange lamented the regulatory situation of the industry, especially in the European Union, the president of China Mobile, Yang Jie, predicted, in a recorded intervention, that China’s digital economy will mean half of the country’s GDP in 2025.

It is already a classic of MWC Barcelona that large European operators lament the fragmented telecommunications market that exists in the European Union, with a common regulatory framework and 26 more specific ones for each country, with their own regulations and licensing. This is causing what they consider to be excessive competition that endangers the competitiveness and the very survival of European industry, in the face of much more homogeneous markets, with only three major operators at the national level, such as in the United States and China.

On the MWC opening day yesterday, perhaps because the circumstances arising from the pandemic and the deployment of 5G are more pressing, the heads of the main operators in Germany, France and Spain put much more emphasis than on previous occasions on the need to better regulate the fixed and mobile telecommunications industry throughout the European Union and receive full political and financial support from the European Commission and the Member States.

The mobile industry has to find solutions to ensure that its technology is used to reduce social and geographical inequalities, which are increasing, proclaimed the president of the GSMA at the inauguration of MWC Barcelona.

The president of Telefónica, José María Álvarez-Pallete, placed next-generation connectivity as “the first ingredient” of the new intelligent digitization. Next to him, as a second ingredient, he put technologies such as Edge Computing, the cloud, cybersecurity, IoT and Big Data. And, as a last ingredient, the substantial expected increase in the data generated by digitization and transformed into information thanks to artificial intelligence. “The true evolution is there,” explained Álvarez-Pallete.

“This is an extraordinary opportunity that we cannot miss, but it is also a great challenge. Governments have to attract investment in the smart digital infrastructure that will make all of this possible, ”he said, with no time to lose. “We have to react to seize the opportunity, and to achieve this, Europe needs a sustainable telecommunications sector, otherwise we will fall further behind in the global race for digital leadership.”

“We demand a new regulatory framework and competition rules to build a strong digital Europe,” demanded the president of Telefónica forcefully. This “claim” proposes a necessary change to take full advantage of digitization, converted into a transformative lever capable of generating growth, quality employment, sustainability and inclusion, as the company recalls in a statement.

Apart from this new regulatory framework, the president of Telefónica stated the need for “a new digital agreement to manage the digital transition with values ​​and people at the center” and “promote a fair, inclusive and sustainable digitization”, in such a way that the digital can also act as a backbone and cohesive axis if it is driven with a height of sights. “It is our collective responsibility to future generations to spread the benefits of digitization and make sure we don’t leave anyone behind.” Inequality of opportunities is the main challenge we face, ”he warned.

This need to combine the potential of digitization and connectivity with values ​​and people is evidenced in the treatment and management of data, which in this revolution has become a totally key new production factor due to the sensitive information they contain. “Our privacy and our individual data are part of our dignity. We have the right to know who uses them and how, how much they are worth and who benefits from their value ”, said the president of Telefónica in his initial speech at the MWC opening session.

Climate change, fake news and the digital divide

Stéphane Richard, as head of the French operator Orange but also as president of the GSMA, organizer of the MWC and association that brings together the majority of operators from around the world, explained the serious challenges facing the mobile industry at the level global. Richard assured that the mobile industry has to find solutions to ensure that its technology is used to reduce social and geographic inequalities, which are increasing, and develop systems that can be better designed and deployed.

In the opinion of the President of the GSMA, the mobile industry faces three main challenges. The first is the deficit in the use of mobile technology, which amounted to 4,000 million people, and who are not in a position to benefit from it, due to lack of connectivity or technological skills. The second is the need to take very seriously the lack of trust in the information that exists among users, due to the theft of data, the proliferation of propaganda, false news and the manipulation of information, which contributes “to a increasing skepticism in technology ”. The third is climate change, “the most important challenge facing the world today.”

With the pandemic, and the consequent acceleration of digital transformation, some solutions have been provided, such as lower carbon emissions, but much more needs to be done. In Richard’s view, operators must use all their resources and capabilities to create a world where everyone can prosper. “Real progress will happen by focusing on positive future impacts,” and not doing spectacular little things. “The benefits of technological progress for humanity do not depend on technology but on what we do with it,” he added.

“We are fortunate to be responsible for an industry that has supported development and built trust over a century.” Trust, he added, is still the cornerstone of a strong telecommunications industry, which is now threatened by the increasing use of cyberattacks and an abundance of data and communications that increase digital vulnerability. In Europe, he pointed out, a third of companies suffered cyberattacks in 2020.

With 5G, being the largest and most fragmented ecosystem, there are new cybersecurity threats and other parts of our activity are also more vulnerable, as digitization expands. The industry, he said, faces a constant increase in threats, which require the best predictive technology because “no one can be protected behind a closed digital world.” It was one of the very few and subtle references to the current climate of technological confrontation between the United States and China, with Europe in the middle, throughout the day and it seems that in the MWC, despite its notorious importance.

Same treatment of information providers

Timotheus Höttges, CEO of the German operator Deutsche Telekom (DT), was very combative with information providers such as WhatsApp or Microsoft, whom he explicitly cited because he considers that they generate a large part of the network traffic but do not pay anything of its infrastructure and maintenance costs, another of the traditional complaints of European operators in all forums and especially in the MWC.

Höttges wondered how it can be that 80% of network traffic is generated by communications providers (known in the sector as hyperscalers or OTT [Over the Top], Facebook, Apple, Google, Microsoft or Amazon, among others) who don’t pay a penny to use the telecommunications infrastructure and extract the full value of our consumers’ data. He also questioned why Microsoft is not treated as a telecommunications platform by European regulators, noting that the US company is “evolving its network and edge connection systems with its fiber networks to provide connectivity to customers.”

In his previous intervention, the president of Telefónica had described the current European regulation of the sector as totally obsolete and recalled that “up to 40% of all traffic is not human, but is generated by machines that talk to each other” . Data, he said, are part of the dignity of the person and “citizens have the right to know who uses them and how, how much they are worth and who benefits from their value.” The European Commission has proposed laws that guarantee data privacy and that do not leave the borders of the European Union, but it is meeting resistance for future approval by Parliament.

Operators need to change their mindset and not be so concerned with owning parts of the networks but with “orchestrating them in the appropriate way”, said the head of Deutsche Telekom

Höettges insisted, as before Telefónica, on the need to create a regulation that facilitates fair play in the European Union and encouraged politicians with courage to approve it. Otherwise, he added, “Europe will lag far behind” compared to the United States, Asia or China, with very clear regulations. “Europe, he argued, has to wake up and change the way it wants to conduct digitization.”

Also at the end of the opening day, Stéphane Richard abandoned his most neutral position and recalled that operators are companies that are due to their shareholders and must be profitable, in a small colloquium on the situation in Europe together with Álvarez-Pallete, also physically present, and Höettges, who was not but in direct connection from Germany. Richard pointed out that, if the current situation is not remedied, there is a risk that in Europe there is only good connectivity in large cities, where the service is profitable, and rural areas will be excluded. Hence the central role of the Member States.

The president of Telefónica assured in the subsequent debate that its main competitors were neither Orange nor Vodafone. “The problem is that the pandemic has increased competition and the digital world has entered, without the regulation having adapted.” And he added: “The current regulation is based on the situation of the networks of the last century; it is totally obsolete ”.

After having contributed his point of view on the current situation in Europe, Höettges referred to the vision of the sector in 2030, after having spent a year and a half fighting the pandemic and facilitating connectivity with its networks. For the head of the main European operator, in the next decade new challenges will appear when connectivity is “a human right”. Operators, he argued, need to change their mindset and not be so concerned with owning parts of the networks but with “orchestrating them appropriately.”

5G opens a new chapter in the digital economy

Yang Jie, president of China Mobile, the world’s largest operator, was totally oblivious to these approaches pointed out by his European colleagues in a previously recorded speech. Yang Jie showed the bottom transparency, in which he points out that the digital economy is growing faster and that 5G opens a new chapter. According to the data in this graph, China’s digital economy amounted to 39.2 trillion yuan in 2020, which represents no less than 38.6% of Chinese GDP.

More surprising, perhaps, is that the Chinese digital economy will grow 11% annually over the next five years and that by 2025 it will reach half of GDP, according to estimates. To the right of the graph is the powerful infrastructure built in China, with about 850,000 deployed base stations, some 330 million 5G mobile users and around 10,000 innovative industrial use cases, ranging from demonstration to mass promotion.

In other graphs, Jie pointed out the need to build intelligent platforms at the intermediate level, cultivate an intelligent digital ecosystem of technologies and industries, innovate at the product level and optimize the organization of structures, human and management teams and strengthen networks, obviously digital and smart. According to the above calculation, the size of the information services market in China was 10.8 trillion yuan in 2020, compared to 8.7 trillion the previous year. By 2025, an annual growth of 14% is forecast and exceed 20 trillion yuan, about 2.6 trillion euros.

Jie cited Cervantes at the end and among his proposals he especially highlighted jointly facilitating the construction of infrastructure and the evolution of the digital space, as well as promoting, also jointly, the integration, convergence and innovation of key technologies in the digital space, as reflected in the bottom transparency.

Perhaps because the intervention of the head of China Mobile was recorded and without interaction with the rest of the speakers, it gave the impression that China is going its own way on the issue of 5G and the construction of the digital economy, without caring excessively. what happens in Europe or in the technological conflict between the United States and China, which is having so many repercussions, as in the deterioration of the global supply chain and supply of all kinds of products, especially semiconductors. In any case, it was clear that the deployment of 5G and the parallel rapid development of the digital economy is bringing the emergence of numerous opportunities throughout the world and sectors, as well as significant challenges.