Ansip changes course on Telecoms market consolidation

By EDRi · October 21, 2015

On 13 October 2015, Andrus Ansip, Vice-President for the Digital Single Market at the European Commission, gave a speech at a conference organised by the Financial Times (FT) and the European Telecommunications Network Operators’ Association (ETNO). Speaking on the topic of policies and regulation in the digital age, Ansip weighed in on the debate on the future of the telecoms industry regulation.

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Ansip argued in favour of pro-competitive regulation as a means of stimulating investment in quality joined-up networks, which would advance the connectivity goals of the EU. Further, he argued that industry consolidation is “not necessarily the answer” as modern network-sharing technologies allow operators to share mobile networks without the need for consolidation. While acknowledging the potential benefits of cross-border consolidation in terms of greater opportunity for telecoms companies to reap the full benefits of the EU customer base, he argued that such cases should be judged from a merit-based, consumer-benefit standpoint.

To appreciate the context, his remarks must be considered against the backdrop of a relentless call by Europe’s major telecoms companies for a relaxation of competition rules, ostensibly to bridge the investment gap. In recent years, telecoms companies have argued consolidation is essential, as it enables them to invest in required technology and infrastructure. This would, they say, allow European operators to catch up with those in the US and Asian markets. In fact, on the very day of Ansip’s speech, a statement was released by the CEOs of eleven companies on the executive board of industry lobby and summit co-host ETNO, calling for competition policy that takes investment, innovation, efficiency and quality of service into account. Consolidation, the statement asserts, will lead to “better outcomes for our customers, especially in light of the increasing demands on networks and services in the future”.

Implicit in Ansip’s speech is a degree of alignment with the views of Competition Commissioner Margethe Vestager, who has taken a hard line on telecoms mergers in the EU. In September 2015, Vestager threw a spanner in the works of telecoms companies by blocking a merger of the Danish operations of TeliaSonera and Telenor. The block was justified by concerns about higher consumer prices and decreased competition, and has left the industry reeling.

Furthermore, it could be argued that Ansip’s remarks also constitute a step away from the stance of Gunther Oettinger, Commissioner for Digital Economy and Society. Oettinger has taken the position that European telecoms companies should be more profitable and allow to consolidate in order to combat market fragmentation and enable them to compete on the global markets. Speaking after Ansip at the FT-ETNO summit, Oettinger advised against the polarisation of the debate in terms of “competition versus investment”. Instead, the Commission needs to “examine amendments to the current (ex-ante) regulatory approach that could support simplification, convergence and vibrant competition”.

Ansip speech at FT-ETNO: Policy and Regulation in the Digital Age: The new wave (13.10.2015)

Oettinger Speech at FT-ETNO: Broadband, the next investment wave and EU policies (13.10.2015)

ETNO CEO Statement on Achieving Europe’s Digital Single Market (13.10.2015)

European regulators take tough line on telecoms M&A (13.10.2015)

(Contribution by Inka Kotilainen, EDRi intern)