Maintaining a high level of ambition in telecom reform is essential to EU competitiveness

Dear President von der Leyen,
Dear Executive Vice-President Ribera,
Dear Executive Vice-President Virkkunen,

We express our support for the top political priorities of your mandate: competitiveness, resilience and the development of a stronger European industry and technology. In line with other sectors, we also believe that a sharp policy shift towards a pro-innovation and pro-investment approach is needed for the EU to become competitive and claim its place in the global technology race. We write to you to support a fundamental overhaul of today’s telecom rules, by fully implementing the recommendations of Mario Draghi and Enrico Letta for our sector and by maintaining their level of ambition for reform.

Today, the connectivity ecosystem accounts for 4.7% of the European GDP[1], it empowers our societies and several sectors consider it a crucial enabler[2], ranging from manufacturing to transports, from energy to agriculture, and many others. As members of Connect Europe, we represent 70% of the sector investment and we commit over €50bn a year in network roll-out and service innovation[3]. We must do more. Additional investment is critical, as outlined also in the recent NATO Summit Declaration, which called to inject “up to 1.5% of GDP annually to protect our critical infrastructure, defend our networks, ensure our civil preparedness and resilience, unleash innovation, and strengthen our defence industrial base[4]”.

We ask to act now and shape a competitive, resilient and inclusive European digital future, in order to achieve EU leadership across the different layers of technology. This requires significantly improving the investment climate for critical infrastructures such as gigabit networks, FTTH, 5G standalone, sovereign cloud and edge-cloud, and undersea cables. It also requires prioritising market structures that are conducive to investment as well as more support for EU innovation in AI, quantum encryption and 6G. With technology moving fast and global competition pressing, we must act with the utmost sense of urgency.

The upcoming Digital Networks Act should bring concrete answers to respond to these challenges, by ensuring that the high level of ambition expressed so far in the mission letters and in high level reports is not watered down. We must overcome today’s fragmented, burdensome and outdated rules, so we can strengthen Europe’s digital infrastructure and achieve a real telecoms single market. Hence, this holds equally true for the on-going review of the EU merger regime, which should aim at a modernized competition policy that supports European competitiveness. Less, and stronger operators, will compete more fiercely in terms of investment and innovation compared to many, and weaker, operators.

We have a unique opportunity to lead in the global connectivity ecosystem and create fresh prospects for sustainable growth, but we must seize it now. The alternative is the creation of yet new technology dependencies and debilitating the Continent’s competitiveness. We stand ready to support you and ensure a successful achievement of your political goals.

[Annex: Concrete proposals for policy reform]

This letter is supported by the following CEOs:

• Allison Kirkby, CEO, BT Group
• Ana Figueiredo, Chairman and CEO, MEO
• Andreas Neocleous, CEO, Cyprus Telecommunications Authority (Cyta)
• Benedicte Schilbred Fasmer, President and CEO, Telenor Group
• Boštjan Košak, President of the Management Board, Telekom Slovenije
• Christel Heydemann, CEO, Orange Group
• Harald Rösch, Chief Executive Officer, Melita Limited
• Jan Van Acoleyen, CEO ad interim, Proximus Group
• Joost Farwerck, CEO and Chairman of the Board of Management, KPN
• Goran Markovic, CEO, Makedonski Telekom
• Marc Murtra, Chairman & CEO, Telefónica S.A.
• Massimo Sarmi, Chairman and CEO, FiberCop
• Michel Jumeau, CEO, TDC NET
• Mike Fries, CEO, Liberty Global
• Nikhil Patil, CEO, GO p.l.c.
• Pietro Labriola, CEO, TIM
• Patrik Hofbauer, President and CEO, Telia Company
• Timotheus Höttges, CEO, Deutsche Telekom AG
• Thomas Arnoldner, Deputy-CEO, A1 Group
• Vladimir Lučić, CEO, Telekom Srbija
   

Annex to the CEO Letter – Concrete proposals for policy reform

• Pro-investment framework and deregulation. With fibre being a strategic objective, the current ex-ante rules designed for old networks are no longer reflecting the market reality and are holding us back: with no changes, estimates show that we will only achieve the EU’s fibre deployment target in 2051[5]. We support a general shift from ex-ante to ex-post control in wholesale access, where competition law and the Gigabit Infrastructure Act would be the standard rules. This would mirror the proposals in Mario Draghi’s report, to reflect new market realities and promote an investment-driven model. Instead of the current “Significant Market Power” regime, we believe that ex-ante obligations should remain only as a safety net in cases of local access bottlenecks.
   
• Scale. From building a sovereign cloud to scaling up investment in AI, cybersecurity or network virtualization, we cannot expect companies in Europe’s fragmented markets to be able to effectively compete with a handful of powerful tech giants who operate on the basis of global business models. Market-driven scale is an existential matter for Europe’s competitiveness as well as for its single market. We are worried that the current level of ambition – and the pace – of the review of the EU Merger Guidelines will not help to improve European competitiveness.
   
• Level-playing field. Regulatory asymmetries with global tech players must be addressed, as they exacerbate our competitive weakness in global digital markets. We should implement Draghi’s recommendation to introduce a mandatory arbitration system to ensure fair commercial deals for data transport services. The structural asymmetries in the internet ecosystem are a problem of bargaining power requiring legislation and they cannot be fixed by loose collaboration frameworks. As a general rule, we should live by the principle “same services same rules”.
   
• Spectrum harmonisation. Divergent national policies, high fees, and short licence terms hinder investment in 5G and 6G networks. Predictable, harmonised spectrum rules and longer license durations are urgently needed to improve the investment environment for mobile network roll-out.
   
• Simplification. Today, the customer journey in the EU is impacted by over 34 sets of obligations and red tape for telecom companies is extremely high[6]. We therefore call to profoundly simplify rules by replacing overlapping or obsolete obligations and by boldly harmonising enforcement across the EU.
   
• Improved Governance. Today, the number of regulators active in digital networks across all Member States is exceeding 270[7] and the current system has failed to deliver meaningful harmonisation. This should be fixed by ensuring real harmonisation at the Union level, in line with the ambition of creating a telecom single market.