Wednesday, 21 November 2018

European telco CEOs call for major cost cutting scheme to support network rollout

By Mary Lennighan, for Total Telecom
Tuesday 16 October 18

DT, Orange, TIM et al warn that increased investment levels are unsustainable, call upon European regulators to smooth path to 5G

The leaders of some of Europe's most influential telcos this week called upon governments and policy makers to help facilitate the rollout of network infrastructure by easing the cost burden and reducing regulatory barriers at a time when the sustainability of massive telecoms investments is being called into question. The chief executives of eight operators met in Brussels to share their vision for future telecom policy and the message they sent was clear…

The leaders of some of Europe's most influential telcos this week called upon governments and policy makers to help facilitate the rollout of network infrastructure by easing the cost burden and reducing regulatory barriers at a time when the sustainability of massive telecoms investments is being called into question.

The chief executives of eight operators met in Brussels to share their vision for future telecom policy and the message they sent was clear: costs must come down and regulation must support investment and innovation.

5G, artificial intelligence and a growing data economy will bring myriad new opportunities, but "European telcos are boosting their capital expenditure levels at an annual average rate increase of 5% since 2010 and yearly telecom investment has now reached over €47 billion," the CEOs of operators including Deutsche Telekom, Telefonica, Orange and TIM said in a joint statement from this year's FT-ETNO event.

"However, declining returns could make this investment effort unsustainable in the long run," they warned.

The scale of the challenge ahead calls for a new industrial policy that will align political ambitions for European digital leadership with regulatory practices, they insisted.

"On the one hand, Europe should launch a massive cost-reduction initiative aimed at facilitating the rollout and operation of digital networks," they urged. This could include reductions in energy costs, cutting red tape, and reducing the time taken to obtain permits.

"On the other hand, Europe should introduce a new investment-and-innovation-readiness test for all new proposed regulation," they added, calling for a commitment to avoid creating new barriers to investment when adopting new legislation and a simplified approach to regulation.

"We have a strategic role to play in supporting Europe’s digital transformation to overcome technological and ethical challenges on such critical topics as 5G, IoT or AI," said Stephane Richard, CEO of Orange. "A new industrial policy, favouring a regulatory shift on network deployment and a level playing field on digital services, is key to keep Europe in the race with the USA and China," he said.

There were similar comments from his peers.

"5G is going to be a revolution both for consumers and for businesses. Regulators have the great opportunity to stimulate this course by simplifying the processes ruling network development and incentivising the demand for innovative services," said TIM chief executive Amos Genish, while Jose Maria Alvarez Pallete, CEO of Telefonica, warned that European operators risk losing their relevance on the global stage: "To preserve European competitiveness in a global digital world, European policymakers must radically change the regulatory paradigm to encourage investment and innovation," he said.

The eight telco CEOs who took part in the gathering in Brussels were: Timotheus Hoettges (Deutsche Telekom), Jose Maria Alvarez Pallete (Telefonica), Stephane Richard (Orange), Dominique Leroy (Proximus), Johan Dennelind (Telia Company), Amos Genish (TIM), Alexandre Fonseca (Altice Portugal), and Atanas Dobrev (Vivacom).

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