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27 septembre 2017

Investing in turbulent times - Speech of Sébastien Soriano, 2017 chairman of BEREC and chairman of Arcep in Financial Times - Etno Summit, Brussels (27th September 2017) 

TURBULENT TIMES

We are indeed living in a turbulent time.

Our lifestyle is drastically changing: Internet is becoming a utility just like water or electricity. And to fully enjoy the benefits of this new era, European consumers and businesses need a seamless connectivity.

The social demand for performant connectivity everywhere is becoming more and more pressing. Political bodies are therefore launching strategic plans to answer this demand and also to boost our continent's competitiveness.

These plans call for more investment in broadband and mobile networks.

At the same time telco operators have to compete with new players - the OTT - born with the digital revolution.

We are living in a fast changing world. Everyday new products and services are launched. Only a handful of them will be successful, but these happy few will completely change how business is done in their respective field.

So what does it concretely mean for the telco business?

Without a doubt, the demand for connectivity will keep increasing. Just imagine how many things could be connected to Internet in a decade.

But who knows what will be the value of the telecom contribution to the future value chain? Will the telecom sector remains a major player in the game or will it be marginalized by the device industry and/or platforms such as Amazon, Google or Facebook?

So yes, the telecom sector is living in a turbulent time made of risks, strong social and political demand but also great opportunities.

This year's debate on the review of the telecom regulatory framework was fed by many reflections on how to best address this new order.

Some of these reflections concern the regulator's role.

20 YEARS AFTER ITS CREATION, THE REGULATOR'S JOB IS EVOLVING

As you know more than 20 years ago the European legislator decided to put an end to historical telecom monopolies. This decision marked the end of an era: the era of State control over communications infrastructures in Europe.

But these networks were far too vital to European citizens and businesses for the public authorities to completely withdraw from the telecom market. This is why independent regulators were created. These new entities were to become the transmission belt between the public interest and the market.

Twenty years later, telecoms stand out as a successful example of a new alchemy. By reinventing the State intervention in telecom networks, the European institutions brought out the best of both the common good and the private investment.

We should be proud of this European model. With this alchemy at its core, our model can stand the test of time.

So, contrary to common beliefs, our regulation model is not made of "pure competition". Competition is a mere tool - even if an essential one - in the pursuit of a political ambition.

And as the political ambition evolves, so should our regulation.

Our job is not only to open a sector to competition anymore and to ensure that such competition is perennial. To a large extent, this is already the case today. Our new job is to accompany the telecom sector in these turbulent time and through the great innovation and investment cycles of today and tomorrow.

We need to fully accept this evolution and draw the necessary conclusions from it. As I see it, our regulation should from now on be directed towards investment and innovation. We have to pivot and this is actually what most of us are presently doing.

Today I think entrepreneurs and investors willing to invest in new networks need two things from regulators: the first is predictability and the second is consistency.

1/ PREDICTABILITY

Rolling out new networks to achieve our connectivity objectives will cost a lot of money. In fact it will cost hundreds of billion euros.

Predictability is one of the cornerstones of a secure investment.

To address this investment challenge, our players need long-term certainty. The biggest hazard for an investor is indeed to be submitted to volatile rules.

In a sector characterized by long-term investments, it may prove helpful for its players to be regulated by an independent technical body working on a medium or even long term approach.

I believe we are an asset to you. Our ambition is to build a sustainable regulation.

A good image of the situation is the one of a ship under the storm, in a raging sea, trying to get to the harbor. We, regulators, have to be like a lighthouse, giving a clear reference for all. Always on duty, solid, dedicated to the public interest.

Like a lighthouse, our regulation shall remain perfectly steadfast and unaffected by the storm to guide the market through those turbulent times.

2/ CONSISTENCY

As you know, BEREC is not a political body. Our strength lies in our capacity to provide harmonized technical solutions to achieve political goals. Roaming, which is really a success story of the digital single market, has been a very good illustration of that.

Last September the Commission proposed to assign to all European regulators a new minimum set of competences in the frame of the review.

At BEREC, we support this idea because it will help promote a soft harmonization across Europe through a flexible approach.

If Europe wants to achieve its digital single market, we need to coordinate our regulations so as to ensure that the Code is applied in consistent and effective manner, and to allow economies of scale for efficient network operators and service providers. BEREC ensures the existence of a fruitful and efficient dialogue at European level. BEREC is a place where we find common solutions and share best practice.

We are already doing it for SMP regulation for instance. Giving a larger common set of competences to all European regulators will enable BEREC to play its coordination role in more fields.

We can help provide European players with a more consistent regulation across Europe. That makes us an enabler of the digital single market.

3/ INDEPENDENCE IS WHAT GUARANTEES PREDICTABILITY AND CONSISTENCY

Predictability and consistency are what you need. And at BEREC we can and are ready to play that part for you. But to do so we need to remain independent.

Independence, for a regulatory body, shouldn't be seen as a danger. You know what I am referring to: the recent documents from the Council about the review, fighting against the Commission's proposal.

It doesn't mean we do things on our own. As I often say independence is not the same thing as separatism. We don't define political ambitions. We are just here to provide solutions on the market to make them come true.

Independence, for a technical body, means preserving an impartial environment in order to find the most objective solutions. Decisions can only be more efficient and legitimate if they take on board independent technical and economic expertise.

Independence ensures that all market players are treated fairly and are equally protected from political uncertainties that may affect investment. It also ensures that all regulators share the same frame of reference - technical and economic expertise - that allows them to find objective common solutions.

To be honest, I am a bit worried today when I look at the latest legislative discussions. But I truly hope that, at the end of the day, the legislators will continue to trust BEREC and national regulators as enablers of the digital single market.

All in all, my message to the EU institutions is the following one: you are more than welcome to redefine the place or the brightness of the lighthouse. But in turbulent times I strongly advise against turning it off.



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