Prise de parole - Interview

Invest or die, says Sébastien Soriano, new head of European regulators, in Global Telecom Business (16 January 2016)

French regulator Sébastien Soriano took leadership of European regulators at the beginning of January. Just before assuming his new role, he fired a stark warning to the industry. James Pearce spoke to him about the challenges of European regulation, net neutrality and more

If telecoms operators and carriers refuse to invest in improving infrastructure, they face being wiped out by even harsher falling margins.

This was the stark message delivered by French regulator Sébastien Soriano, who will take the reins in 2017 at Berec – the Body of European Regulators for Electronic Communications – in 2017.

Soriano was appointed as the head of Arcep, the Autorité de Régulation des Communications Électroniques et des Postes, by France’s president François Hollande in January 2015. He claims European operators are facing a number of challenges, but their best bet is to put more money in to improving connectivity – be it fibre-to-the-home (FTTH), 4G or even 5G.

"When I speak about investment, it is not just the amount of money that is spent," he says in his office in sight of the Eiffel Tower: "In the US they spent more because there is not network sharing – it is stupid money to some extent.

"What we want is connectivity – poles, coverage. We are using all our toolbox to make this shift from just price competition to a mix of price and quality."

This expands across Europe, where he questions the level of interest in investment from the telecoms industry. After spending billions on 4G, the industry is poised for another extravagant shopping spree on the fifth generation of wireless technology (5G), which is set to be launched by 2020.

"Today, the real question is not in regulator’s hands," he explains. "It is in the industry’s hand. Does the mobile industry really want to invest in 5G? I was really struck by the comments in the operators’ 5G manifesto."

The strategic vision for 5G

That report was released in July 2016. "In it, the mobile industry looked at the strategic vision for 5G and 90% of it was really positive and interesting. But at the end of the document, it says: 'If Berec is still wanting to adopt a tough guideline for net neutrality, maybe we will not invest in 5G.’ Where is the strategic vision of these guys? Their plans only depend on what Berec decides? That’s weird," says Soriano.

The French market, he claims, is an example of somewhere in need of investment, with great prices but poor connectivity. Despite being Europe’s third richest economy, France was ranked only nineteenth out of 28 countries on the European Union’s digital scoreboard. It ranked 22nd for broadband, with take-up at just 52% compared with the Netherlands, which leads with 80%. The numbers are even worse for France when it comes to next generation access, which was ranked third from bottom. Just 43% of French people can access next generation connectivity, and this number falls to 20% in rural areas.

"We have fierce competition when it comes to pricing," he says. "We consider prices OK in the sense that they don’t need to become any lower. The question is do we have sufficient investment and connectivity, and that is the main challenge.

"If you look at the EU digital scoreboard, our rank is very low. On fixed networks, we are in a very strange position as we cannot massively reuse copper or the cable network, so we have to roll out new infrastructure. Presently our rank is bad, and it will take time, but we will have a better rank one day.

"We have to focus on that and give the maximum visibility to all operators about FTTH. What we want on fibre networks is to make sure all operators are on board. Orange is investing very much – this is good. We are working in the frame of our market review to make sure all operators have the ability to also invest.

"On the mobile side, it is a very different story, as we have no excuse to be as low as 21st out of 28. There is no obvious reason for it, and we really want to reset the investment in mobile networks."

Soriano will end network sharing agreements in France, claiming they stifle growth. This means Free Mobile, part of Iliad, will end its agreement to use Orange’s network for 3G, while a 2G/3G/4G network sharing agreement between Bouygues Telecom and Altice’s Numericable-SFR must also come to an end.

"We want to help operators who invest more than others to monetise their advantage. The question is how can we give the end user the relevant information so that the competition is not just on price, but on quality and coverage." asks Soriano.

Arcep will publish network coverage maps in open data for all operators. Soriano hopes this will lead to comparison tools that can highlight mobile coverage at home, on a user’s commute or in the workplace.

"Last year we organised an auction of the 700MHz band. We decided to impose on operators specific reporting on data coverage on these railways. When we asked the two operators in the discussions, they said: 'But it is terrible. If we have to release this information, we will be obliged to improve.’ So there are tools to push operators."

Casting the net for neutrality

There are still big challenges on the horizon for regulators, he admits, most notably around the topic of net neutrality.

In his upcoming role as head of Berec, Soriano will be tasked with seeing the implementation of the European Commission’s proposals for a free internet – known as net neutrality – and how regulators in the 28 European member states enact these.

However, he claimed the task of European regulators has been made much easier than in some countries, such as the US and India, because the Commission has itself taken the lead on this, bringing in regulations.

"We are very lucky in Europe because the responsibility of defining the rules that have been enforced over net neutrality has been taken by the politicians. Parliament, the European Council and the Commission did the job by adopting a regulation. In the US or India, there is no net neutrality act. So in those countries, regulators have enforced this themselves, but this can be challenged. The FCC is at court, and even if they won, there is still a risk or hazard in their decision.

"Now we are in the implementation stage. It will be a very important part of next year’s Berec work programme. We will do several things.

"We will adopt a common toolkit on how regulators should monitor net neutrality, in terms of monitoring network congestion and quality of service.

"All regulators should adopt before the end of June a national report about the implementation of net neutrality so we can issue a global report before the end of the year, giving a view of the implementation by all NRAs.

"At a more informal level, we assumed in the guidelines that regulators will try to work together when they are dealing with the same cases. We will try to make sure the way things like zero rating is dealt with is consistent. But we are politically backed – some things are forbidden and some are clearly authorised. But some are in the grey area and that is the trickiest area, but at least we have a clearer framework."

More complicated for Berec will be the issue of roaming. The EU is set to introduce free roaming across member states by June 2017, but questions still remain about limits on how many days users can roam for. The industry wants these limits to prevent what it has labelled "digital tourism" where users buy SIMs in cheaper countries, but then use them in more expensive ones for the cheaper price.

"We understand that roaming is some kind of totem about what Europe can deliver to people. It is a political choice. But on the other hand we have to avoid an inconsistent implementation of that. What we ask of the commission is that they be a little bit clearer about the limits that operators can define. Because if operators can do that, in some countries it will be 20 days, or 80 days, or 100 days. Where is Europe?

"It may be good to pass the hot potato on to local regulators, but with some limits, because otherwise the political issues are bound to reappear if it is not harmonised. That is the point we are making."

> L'article sur le site www.globaltelecomsbusiness.com