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Balancing Market Unity and Diverse Telecom Opportunities in EU

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Recently, ‘Much More Than a Market – Empowering the Single Market to deliver a sustainable future and prosperity for all EU Citizens’, a report aimed at strengthening the European economy on a global scale was released. The report’s architect, Letta, was entrusted by European leaders to study the problems in the continent’s single market, and to present his observations to the European Council.

The report analyses a number of industries such as finance, energy, retail, telecoms, health, and agrifood. The European telecoms market was spotlighted for its glaring fragmentation, with the EU having 27 separate national communications markets, each serving an average of five million customers. This contrasts sharply with the US and China, where they respectively service 107 million and 467 million customers. 

The report champions greater unity amongst national telecommunications regulations within the EU and proposes a cross-European regulatory body to supervise the telecoms sector. While the current setup was found to be pro-competitive, and beneficial to consumers due to better pricing, the report implies that due to the ‘excessive’ entry into the market by ‘small-scale, territorially focused operators’, it could be disadvantageous for a technology shift towards advanced networks requiring major investments. 

The need for economies of scale was emphasised repeatedly in the report. European telecoms can attain the required cost reductions and innovation levels to construct essential digital infrastructure and shape new services like edge computing and the IoT, only if there is a considerable increase in scale.

The report’s stance is in line with the longstanding view of Europe’s mobile operators, represented by their lobbying group ETNO, that the competitive characteristic of the EU market has placed operators in a less favourable financial situation, hampering their capability to make additional investments.

The report iterates that the “lack of integration in financial, energy, and electronic communications sectors is a primary reason for Europe’s declining competitiveness,” and emphasises the need to strengthen the Single Market for these sectors. This was identified as critical in ensuring Europe stays competitive when compared to China, the US, and India.

By promoting a unified European telecommunications market and incentivising necessary investments to bridge the growing connectivity investment gap, Europe hopes to increase growth and investment attractiveness for its operators. Telefónica, for one, has publicly endorsed the report, in particular, the emphasis on the telecommunications sector as a strategic lever for competitiveness, innovation, citizens’ well-being, and the EU’s resilience, particularly in terms of cybersecurity.

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