Liikanen hails telecoms as ‘key achievement’ of Commission

Date: 25/03/04

PC: Can you give European Voice readers a general overview of the health of the communications sector?

EL: There is cause for cautious optimism in the sector after a very difficult couple of years.

CEOs are now talking in terms of next year, while twelve months ago they were focused on the next month.

Even if overall growth in 2003 remained modest, demand was strong for both mobile services and broadband access. Broadband connections doubled to well over 20 million lines. Demand for mobile data services will join broadband this year as a key driver for recovery.

The better economic and market conditions have coincided with the entry into force of the new regulatory framework. We now need to bed down these rules and, of course, see rapid progress by those member states who have not yet implemented the framework.

We also have to see member states move ahead and implement their national broadband strategies and stimulate demand by boosting their efforts to support e-government and e-health.

What do you see as the main achievements of this Commission in terms of the information society?

Looking back over the life of this Commission, our work to reshape the electronic communications landscape will be one of our major achievements, particularly because of the impact of the sector on growth and productivity.

The link between ICTs [information and communications technologies] and competitiveness is now more widely understood. We have made progress on information by pursuing regulatory reform, supporting researching and, through e-Europe, pushing the broader take-up of new services by businesses, citizens and governments.

It is interesting to see that in their recent letter ahead of the Spring European Council, the leaders of Germany, Belgium and Denmark stressed the importance of broadband communications and supported the Commission's analysis in this area.

What is the picture in the countries joining the Union on 1 May?

These countries appear to be on track. They will bring new competition and dynamism to the enlarged internal market. We saw this last month in Budapest when we met the new member states and other central and eastern European countries. Most countries will also put national broadband strategies into place. It will be very important to ensure that electronic communications markets are competitive.

This means having a clear and predictable legal framework by putting our new rules into place on time and correctly applying them.

I am sure that in the area of information society the new member states will do very well. They have a long and solid experience in skills in natural and applied sciences as well as mathematics.

And if there is one area in which leapfrogging is possible, it is in the internet world.

Where is 3G (third generation)? Why is there still so little of it around? When will we get it?

First, why does this matter? It is not because we like technology for technology's sake.

Mobile communications matters because it is driving growth in the communications sector and because this is a sector in which our productivity performance is actually higher than the US', it is boosting the performance of the whole economy.

Mobile communications and high- speed access is making business and government more productive. It will change the way businesses can organize their work and their relationships with customers. It allows services, databases and knowledge to be shared from anywhere, anytime by anyone.

As to where we stand today, mobile data services - whether using existing or 3G technology - will be a major story for 2004. Demand for high-speed access while on the move will drive investment and the launch of new services and devices. 3G is, of course, already available in five member states - Austria, Italy, Denmark, Sweden and the UK, with some 700,000 subscribers across Europe.

The number of networks launched during 2004 may grow to as many as 40, most of them in Europe.

Can you give a flavour of the most promising EU-funded research and development in the communications sector?

Our priority for research and development of information society technologies (IST) has been to focus on the needs of people using them - be it businesses or you and me. We have also tried to play to Europe's strengths - mobile and wireless systems, consumer electronics and micro and nanoelectronics [technology using tiny devices] to ensure that current success continues.

In relation to electronic communications, these objectives have translated into specific areas of practical interest. Research into 'broadband for all' has looked at ways of improving and increasing capacity on broadband networks. In the area of mobile communications, we have been looking beyond 3G mobile services to a global, seamless, internet protocol-based mobile communications. Work on home platforms is attempting to realize the full potential in the home of the convergence of audiovisual, IT and telecoms services.

A final example of current research is our support for power-line communications - the possibility of using the electricity supply network as an alternative infrastructure to deliver electronic communications.

This is already subject to large-scale trials, but our recently launched OPERA project is supporting research into a future, significant upgrading of the speed and capability of such networks.

Finally, I have recently worked with a group of industry and political leaders to shape a future European security research programme. With the events in Madrid, this has become all-too topical a question. The resulting report identifies current security challenges, areas where European action can help and puts a price tag of around €1 billion per year on what our response should be.

This is important as, while technology will not guarantee security, security without technology will not be possible.

The Commission has adopted a short list of 'relevant markets' which may not be subject to competition, and where regulations, such as 'cost-based interconnection' with rivals' networks could be necessary. Do you have any ideas about updating the list of relevant markets? For example, with regard to 'bitstream access' (this gives internet providers the opportunity to 'piggy-back' onto the networks of the incumbents to offer internet services) or 3G operators, which are heavily regulated as soon as they hit the market because of the way the list works?

Or, will you not be proposing changes because the current list has not yet been widely applied?

The Commission's recommendation on relevant markets provides a list of markets which national regulators should use in assessing the market power of particular operators in order to assess whether there is a need for ex ante regulation to be applied.

The recommendation provides for it to be updated periodically in order to take account of market developments.

Bearing in mind that we are still in the first stages of this new approach by national regulators, we will have to assess carefully whether it is the right time to revise the recommendation.

In the case of the examples you mention as possible future candidates for the recommendation, you have to remember the role of competition in determining whether a market might need to be regulated.

Where there is limited competition, for example, bitstream access, used to provide many DSL [digital subscriber line] broadband services, or certain specific mobile markets - ie wholesale call termination or wholesale roaming - the inclusion of markets might be justified.

But most 3G and mobile data seem unlikely candidates, particularly if there may be three, four or five operators competing to supply retail services.

'Voice over internet' was the subject of a hearing last week. Some operators, such as France Telecom, have said they believe it could all but replace traditional fixed-line voice telephony in the next five years.

But how do you think it should be regulated in future to ensure that its potential is fulfilled?

Voice over the internet protocol (VoIP) is just one of a range of new multi-media services that are appearing by using the internet protocol. There are several flavours of VoIP telephony on the market and the conditions that apply depend on the precise nature of the service offered.

The basic starting point from the whole new EU legal framework is to roll back legislation, to take account of convergence by basing regulation on markets and not technologies, and not to regulate emerging markets inappropriately.

Under the EU framework, companies do not need to get an individual licence before offering new services, but they do need to follow any rules laid down in member states' 'general authorizations'. Some forms of VoIP would not need to be regulated at all under the EU framework.

For example, the use of VoIP software downloaded to a PC where there is no provision of a service,

while others - marketed directly at the public - could face light-touch regulation designed to protect consumers, for example to ensure they have a proper contract.

We also need to look at other consumer issues, such as how to deal with calls to emergency services from people using VoIP telephony, since the VoIP service provider may not know the location of the caller and so cannot provide location information to the emergency services.

The recent hearing focused on this wide set of services. It confirmed the findings of the consultants' report presented at the hearing that it is not always easy for a new entrant offering VoIP services to know exactly what rules apply to them.

It would therefore be useful to publish further guidance on how EU rules apply. But we need to do so fast if we want to ensure that emerging services can flourish.

When will mobile companies who own expensively acquired radio spectrum be able to trade some or all of it - and what benefits will such spectrum trading provide?

This is an important issue.

Spectrum trading could offer major benefits in Europe in terms of innovation, improving efficiency, stimulating competition and ensuring faster and easier access to net services and technologies.

However, we do not yet have a clear picture of national approaches to this issue and, of course, there is no specific timetable at EU level.

The UK's plans are probably the most advanced. The regulator (OFCOM) is planning to phase in flexible use and flexible transfer of spectrum rights in the UK, probably as early as the end of this year, but on a limited basis.

Several other member states are also preparing to introduce spectrum trading, but the timing is not yet known.

Accelerating and coordinating these reforms at Community level would, of course, help.

Ever since Europe worked out the standards for so-called GSM mobile telephone technology, standards and interoperability have been a big EU issue.

Have you made a decision regarding the possible mandate of a specific standard for digital interactive television, such as the 'MHP' system, for example? If so, what are you considering?

We have not yet taken a decision on the need to mandate a particular standard to support interactive television services.

A decision is not due until the end of July.

However, work is under way and we are just launching a public consultation on the issue and will follow this with a public hearing on 20 April.

Interview with Erkki Liikanen, European Commissioner for Enterprise and the Information Society.