Workshop 1: Models to Support Investment in the Network Infrastructure in Europe: What is the Way Forward?
Rapporteur: Francesco Vecchi
The Digital ecosystem backbone is composed of very High Capacity fixed and mobile comms physical infrastructures connecting all different type of actors in the whole ecosystem. Network infrastructures promote innovation with positive externalities, especially to industry, society level), while utilities and business are highly regulated by competition and consumer protection laws. Actually, connectivity remains an industrial policy target from both the quantitative and qualitative point of view. Speaking of revenues, data shows that they depend on the decreasing prices and this economic dynamics bring the average investment per capita in the EU to be lower than in other parts of the world. Finally, the EU has a structured regulatory system ensuring competitive access and neutrality rules, with the effect of prohibitin commercial and technical discrimination
The OECD remarks the importance of looking at Network Infrastructures from a holistic point of view and focusing on its overall objective. As a matter of fact, without connectivity there is no digital transformation and, consequently, universal coverage and high-quality connectivity are needed. Two trends are shaping the current market. First, communication operators are playing a major role in providing connectivity, and the OECD is monitoring their financial performance. Most importantly, tower companies are mainly investing in rural and remote areas rather than urban centres. On the other hand, publicly listed tech companies preferably invest in data centers, thus producing an additional source of investment.
ETNO points out that IoT traffic, connecting devices, eGovernment services represent other crucial issues for the current digital transition. The EU wants every citizen to be connected to 5G by 2030, to support the consistent growth of content (estimated between 20-30% each year until 2030). In this perspective, there are still several gaps to fill, especially when it comes to coverage and capacity, as well as going towards more software rather than hardware defined infrastructures. To face this transition, new solutions must be found, such as different investment models, more margings, more competition in platform players, and a sustainable financial capacity. All in all, it is important to remark that prices cannot be increased because the market is already highly regulated.
However, what is at stake is more than interconnection: it is also neutrality. Indeed, the Internet is based on the concept of permissionless innovation: as long as one speaks the internet protocol, it is possible to propose innovations without legal or public permission. Actually, the internet is not precisely public: peering transit, internet exchanges and private internet are all run by non-pubic players. And all those players have their own data storage and other infrastructures. Finally, speaking of 5G, laws of physics are not a social construct: 5G connectivity performances are bound by the speed of light and, at some point, increasing the speed of cables is not enough and the distance must be shrunk. As a consequence, it is important to push services to the edges.
Finally, there was a discussion over price increases, customer protection, and internet fragmentation. Still, though admitting an increase in individual customers’ prices, the overall impact would be positive since other services prices would be balanced. Also, the internet fragmentation is due to several causes, but redirecting traffic could lead to Internet quality problems.