Arcep speaks

Sebastien SORIANO, Chairman of ARCEP, Keynote speech introducing a panel on "competition and competitiveness across the digital value chain" - ETNO MLex Conference - Brussels (23 June 2015)

Dear all.

Thank you very much for the invitation.

I am very glad to be in front of all of you today, and to have the chance to introduce this panel about competition and competitiveness across the digital value chain.

I have 3 main messages I want to deliver to you today: first, Europe needs to wake up. Second, the telecom regulation is neither the problem nor the solution. And finally, my third message, which is maybe the most important, will be that there is still a need for regulation in the digital world.

I'd like to start this introduction speech with a reference to a report that was published a few months ago by the French Senate. This report was entitled "the European Union, colony of the digital world", and I think this idea still resonates in the news today. Because we all hear it every other month: the Barbarians are at our doors, it's the uberisation of our economy.

And, it makes me wonder: is Europe getting colonized? I say that because today, all the giants are coming from the other side of the Atlantic: American websites are the most visited, American search engines are the most used, American operating systems are on most of our phones and computers…

So yes, it is true that the online world is dominated by Americans firms, by a very few firms actually, coming from a very few places in the United States.

But this is a very negative way of looking at Europe, and what I want to convey today is some positive thinking. I think that we do not want the European model to be constructed as a rejection or a mere copy of the current American one. We should rather start looking for synergies to foster the mutual development of our digital economies. Yes we can, as well!

My second message is that we have actually tons of reasons to be proud of what Europe has already built. Our telecom market is definitely not the problem here: thanks to a highly efficient and virtuous model, we managed to build the world's most competitive telecom market, capable of providing European companies with sustainable development and growth.

I think we should congratulate ourselves for this, and stop the European self-bashing: Be proud and advocate our model in the world! The 2002 framework has been a success and it's a source of inspiration for many countries. In terms of prices and quality of service, the least we can say is that Europe is pretty well positioned. Even Barack Obama has started to acknowledge this a few months ago, taking Paris as an example of a city providing very high speed Internet.

Furthermore, and more provocatively, I don't believe the telecom core industry will be the solution either. Tomorrow's tech giants are today's startups, and we should stop believing in the construction of an Airbus of the digital economy coming to save us all. I know this is a bold thing to say, but the previous European Commission wasted a lot of valuable time trying to make the telecom sector the alpha and the omega of the European digital economy. The telecom sector competitiveness is necessary but not sufficient for the success of the European digital economy.

I might not be in front of the right audience to deliver this message, but the size of our telecom operators has become a marginal issue in the challenges we must pursue today to raise our digital economy on the first step of the world's podium. This is a deliberate overstatement here, but Europe needs to let this wonderful telecom market it gave birth to live its own life, and urgently start caring about its new babies: startups!

One positive thing though is that the European Commission recently acknowledged this past failure, and this was a starting point for the construction of the digital single market. And Mr. Viola confirmed today the new ambition of the Commission for digital innovation. We are not, as some have said, the global village idiots.

Finally, my third message is that there is still a need for regulation in the digital world.

1. Investigate the startups of the telecom industry

I promise this is not some kind of monomania for me, but I think the first field Europe should investigate are the startups of the telecom industry. And a top priority on my list is the Internet of Things. Today, networks are used to connect people, but by 2020 we will have 40 connected objects for every connected human in France. New regulatory challenges will arise: what type of addressing to use, or what kind of network to use to ensure all these objects can communicate with one another.
Europe has the potential to be very successful in this domain. At every level of the value chain, European companies are offering new models to make sure that every city, every object gets smarter.

2. Build a real connectivity policy

The second priority must be connectivity. Connectivity is the engine for the digital age: Connectivity is the root to innovations that can spread all over Europe.

I don't think I'll be revealing any secret today by saying that investment will be the key to this super-connectivity that we need. Today's regulation must be designed to encourage investment in next generation networks, and at the same time, to preserve space for innovation. And we all know the best driver for investment is competition: European regulators must continue to build on the existing dynamic competitive environment to ensure enhanced access and levels of quality of services as well as transparency and choice in terms of offers.

Apparently, one question that the following panel is going to study is whether we need more or less regulation in Europe. In my opinion, this question is intrinsically biased in its formulation: no "one size fits all" model will be able to achieve super-connectivity in Europe. And deregulation is actually in the DNA of the European framework.

Developing networks is very much a matter of geography, demography, even history. It's only by taking into account diversity that we can promote successful models. The European framework has been made to work as a toolbox. By construction, it allows for flexibility, and since the very beginning, the national regulators' job has been to adapt the usages of those tools to the current state of their markets.

Of course, we need to upgrade the toolbox every now and then. But most of all, what Europe crucially lacks of in the current framework is a responsibility for every country to achieve specific objectives in terms of connectivity.

Sure, we have the digital agenda and the Europe 2020 strategy, but I think the Commission would be legitimate to go even further: for example, why wouldn't the Commission ask every country to notify a deployment plan that fulfills those objectives? Or, to take another example, why wouldn't we include a mobile connectivity objective in the Europe 2020 strategy?

I've already spoken too much, but let me just add a few final words on what I consider to be framework's new frontier: the open internet.

3. Regulation's next frontier : guaranty an open internet

As a telecom regulator, it is my duty to be an enabler, to foster innovation. And the internet is maybe the best example we can think of to illustrate the great power of innovation.

A few years ago, Arcep was one of the first regulators to initiate a working program on net neutrality. And today, we still very much believe that net neutrality is a matter of public policy and shall be promoted. Presently, rules for an open internet are debated at the European level. As long as these rules do not throttle innovation, and leave enough space, at the edge of the strictly regulated space, for stakeholders to have the capacity to differentiate their service offerings, then this is a good thing.

But imposing neutrality network will not be sufficient to ensure open internet. We also need to examine the situation of the very few giants that dominate the web today, and seem to unilaterally dictate the rules that are shaping our digital economy. This is why I welcome the initiative of the Commission that just launched some collective thinking on platform role in the online environment.

This is not a matter of "network regulation vs. Platform regulation". Both tend to achieve the same goals: enabling players to compete, innovate, and promote new services.

Europe is starting a new adventure in the digital field, and I hope the next panel will help answering the main question at the very heart of this adventure: How should the rules be re-defined for European digital economy to blossom?

Thank you, and now I will leave the panel to debate.

Linked documents