Five reasons why Europe lags behind on high-speed internet

Connectivity and low latency times are crucial for economic progress in developed states. While European policymakers don’t shy away from grand plans to keep the continent competitive, the essential ingredient for a successful digital strategy is the creation of a real digital single market within the European Union. Here are five major reasons why Europe is lagging behind the United States and parts of Asia, along with a possible solution.

A lack of incentives for long-lasting investments in broadband

Countries like Germany, Italy, and the United Kingdom see broadband spectrum mainly as a cash cow for public finances, and not as necessary infrastructure for economic growth in the information age.

As such, broadband spectrum is auctioned off to the highest-bidding companies which typically keep that spectrum for 20 years. Given the fact that telecom companies paid over €600 per resident in these countries, they would have to charge €30 a year per user just to amortize the spectrum license fees they paid before losing the license after two decades.

Those lucky companies that win the spectrum auctions have very little wiggle room to invest in building out the network after paying an average of €50bn per market for the licenses.

Thankfully, the EU recently reformed and partially harmonized the process of awarding spectrum for data to telecommunications providers. But instead of awarding spectrum permanently to the auction winners – and therefore creating a secondary spectrum market – they mainly increased the usage time to 25 years.

Europe’s export powerhouse falls behind digitally

Germany, the EU’s largest member state, has one of the worst developed broadband accessibility in the entire economic area. One out of 11 households does not receive a 3G signal in their home. Only Slovakia ranks lower. One out of nine rural households do not have access to broadband DSL internet, and merely 65 per cent of households have access to the internet at a rate faster than 100Mbps.

Germany’s southern neighbour, Switzerland, on the other hand, provides nigh-on 100 per cent access to speeds beyond 100Mbps. Germany’s weak performance when it comes to broadband infrastructure is especially surprising given that, as the EU country with the fifth densest population, network infrastructure per square kilometre should be much cheaper and easier to improve.

Market entry barriers within the single market

Despite having a single market, there are still many barriers for telecom companies based in one EU country that wishing to enter the market in another member state. Pre-selections by regulators on which companies are even allowed to bid for spectrum licenses, complicated and dispersed application procedures for licenses, and other red tape hinder innovative competitors from entering telecom markets.

The European commission needs to be bold in breaking through these barriers in order to enable consolidation of telecommunication and broadband markets in Europe. This would allow consumers faster connections at lower prices.

The missed opportunity of 5G

A report from last year estimates that, by 2025, half of all American households will have access to ultra high-speed 5G network technology. In contrast, the figure is 31 per cent in Europe. Indeed, some of its major members like Germany and Italy will most likely have even lower levels of coverage due to their spectrum auctioning systems.

By overcharging network providers for spectrum licenses, governments trade long-term economic competitiveness for quick household surpluses. While fiscal stability is something governments should strive for, they should at the same time not take broadband spectrum and future technologies hostage for these purposes, but instead fix their structural overspending.

Politicians fall in love with the wrong technologies

Instead of merely defining a framework for innovation, many policymakers and regulators too often bet on specific technologies and demand that companies use them.

One recent example of this was the EU’s push to determine ITS-G5 technology as the way for autonomous vehicles to communicate with surrounding cars. A more innovation-friendly solution would be to simply define the maximum tolerated latency of the communication and then let various solutions compete on the market against each other. The EU mandate for specific catalytic converters on motor vehicles displays the same worrying trend.

It’s hard to imagine that the DVD would have emerged if governments had mandated that all video material be stored on VHS cassettes. A “tech-neutral” approach to regulation allows consumers to access newer and better technologies without having to wait for legislative changes.

Europe still has a long way to go before it can fully achieve a digital single market for its hundreds of millions of consumers. It must now turn its attention to breaking down barriers within the single market and reducing artificial costs for network providers. Both would reflect positively on the network quality and phone bill of consumers. Upcoming decades will be defined by digital innovations, and Europe must adopt smart policies to keep up for the sake of its consumers.

Fred Roeder is Managing Director of the Consumer Choice Center.

Originally published at https://1828uk.com/2019/03/19/five-reasons-why-europe-lags-behind-on-high-speed-internet-2/

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About Fred Roeder

Fred Roder has been working in the field of grassroots activism for over eight years. He is a Health Economist from Germany and has worked in healthcare reform and market access in North America, Europe, and several former Soviet Republics. One of his passions is to analyze how disruptive industries and technologies allow consumers more choice at a lower cost. Fred is very interested in consumer choice and regulatory trends in the following industries: FMCG, Sharing Economy, Airlines. In 2014 he organized a protest in Berlin advocating for competition in the Taxi market. Fred has traveled to 100 countries and is looking forward to visiting the other half of the world’s countries. Among many op-eds and media appearances, he has been published in the Frankfurter Allgemeine Zeitung, Wirtschaftswoche, Die Welt, the BBC, SunTV, ABC Portland News, Montreal Gazette, Handelsblatt, Huffington Post Germany, CityAM. L’Agefi, and The Guardian. Since 2012 he serves as an Associated Researcher at the Montreal Economic Institute.

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David Clement, North American Affairs Manager with the Consumer Choice Centre, says saddling business operators with rules about breaking down costs often leads to added expenses for the wrong people.

“Consumers will ultimately end up paying for that,” he says. “And so, whatever measure that is undertaken from the government has to be done with the perspective increased costs on suppliers or on producers could ultimately translate into higher prices for consumers.”

He says the best way to bring prices down is usually to boost competition.

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About David Clement

David Clement is the North American Affairs Manager for the Consumer Choice Center and is based out of Oakville, Ontario. David holds a BA in Political Science and a MA in International Relations from Wilfrid Laurier University. Previously, David was the Research Assistant to the Canada Research Chair in International Human Rights. David has been regularly featured on the CBC, Global News, The Toronto Star and various other major Canadian news outlets.

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About Bill Wirtz

Bill Wirtz is policy analyst for the Consumer Choice Center, based in Brussels, Belgium.

Originally from Luxembourg, his articles have appeared across the world in English, French, German, and Luxembourgish.

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He blogs regularly on his website in four languages.

DOJ’s blocking of the AT&T-Time Warner merger is a blow to consumer choice

CONTACT:
Yaël Ossowski
Deputy Director
Consumer Choice Center
[email protected]

DOJ’s blocking of the AT&T-Time Warner merger is a blow to consumer choice

Washington, D.C. – On Monday, the Department of Justice filed a civil lawsuit in order to block the merger of AT&T/DirecTV and Time Warner Inc.

Yaël Ossowski, Deputy Director of the Consumer Choice Center (CCC), said blocking the merger is a dangerous precedent, and will hurt consumers who woud otherwise benefit from the increased services the company could offer.

“Putting such a large merger at stake because President Trump has a beef with CNN, which is owned by Time Warner Inc., is a dangerous precedent. A vertical merger such as this one would otherwise have passed with flying colors.

“The Department of Justice has instead made false claims about attempts to snuff out competition. The truth remains that both companies do not compete in the same space, and that their merger would actively lower prices, increase the quality of services, and ensure the First Amendment is protected in the marketplace,” said Ossowski.

***CCC Deputy Director Yaël Ossowski is available to speak with accredited media on the AT&T-Time Warner merger and consumer choice issues. Please send media inquiries HERE.***

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org.

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About Yaël Ossowski

Yaël Ossowski is a journalist, activist, and writer. He's currently deputy director at the Consumer Choice Center, and senior development officer for Students For Liberty. He was previously a national investigative reporter and chief Spanish translator at Watchdog.org, and worked at newspapers and television stations across the country. He received a Master’s Degree in Philosophy, Politics, Economics (PPE) at the CEVRO Institute in Prague. Born in Québec and raised in the southern United States, he currently lives in Vienna, Austria.