The last few months have shown by force of circumstances the strategic importance of telecom networks. Qualitative, reliable and secure broadband connection - whether it is fixed or mobile - is not only essential at home, but also for small and large enterprises.
Over the past months, ECTA members have been all hands on deck, working around the clock for the networks, services and their users. They contributed hugely not only to preserving network resilience and redundancy, assuring service continuity for citizens and enterprises, and ensuring durable connectivity for data centres and those at the front line, the health actors.
In her mission letter to the executive vice president Margrethe Vestager, the chairman of the European Commission Ursula von der Leyen, indicated that: “in striving for digital leadership, we must focus on making the markets work better for consumers, businesses, and society, and that we must support industry to adapt to globalization and twin climate and digital transitions. We need companies that compete on equal terms, and consumers that can benefit from lower prices, greater choice, and better quality.”
Digital transition will have an impact on every aspect of our economy and society, and rapidly involving digital technologies will transform all sectors and play a crucial role in confronting the challenges we face with the environment, resource efficiency, and climate change.
A competitive telecoms and digital sector can be a driving force for all the other sectors of the economy to successfully address these challenges. Ubiquitous high performance 5G, fibre, and comparable network technologies are increasingly understood to be essential common infrastructures. This enables global competitive business transformation in all vertical sectors, shaping the future.
How does this work?
We all know the investment needs of 5G and fibre networks are important and that competition drives investment. France is probably the most competitive B2C market, with four main integrated fixed/mobile MNOs along with several MVNOs and fibre deployment initiatives. For the last five years, investments in fixed and mobile networks have grown year after year to reach €10.4 Billion last year and the race for massive 4G deployment only began when Bouygues Telecom was allowed in 2013 to deploy 4G in the 1800MHz band just to mention but a few examples.
Competition also drives customer service. In Spain, Masmovil fully entered the Spanish market by benefiting from the remedies imposed by the European Commission when clearing the acquisition of Jazztel by Orange Spain, and later when they bought Yoigo, the fourth MNO.
In an already well-captured market, they successfully focused on customer service and continue to easily score best at the GFK net promoter score. This illustrates how competition significantly improved customer service.
The new telecom policy focus of the last two decades has been on consumers, and unfortunately B2B markets remain highly concentrated. The focus for the next decade will be B2B, and this will require a change in business approach from a focus on the consumer mass market to enabling business users across all industrial sectors from start-ups to established conglomerates.
Looking forward to the fourth industrial revolution, it is essential for all other sectors of the economy to achieve their competitive digital transformation. This has never been so important as today – it means that the strategic alignment of operators in the B2B market has to move towards closer intimacy with their customers to allow new business models to emerge. Telecoms and digital resources are the driver for this.
To unleash the innovation potential of all the other sectors of the economy, it is essential that they can rely on a diversified offer of products and services proposed by a similarly broad range of smaller and larger players. This is essential for new business models to emerge and to overcome the cannibalisation barrier of existing business models. Indeed, the fear for cannibalisation is one of the biggest barriers to innovation by well-established players.
Competition not only has provided lower prices, improved quality and efficiency, but it has also been the fundamental driver of innovation – the driver that forces market players to continue to improve. Society as a whole benefits most when there is sufficient competition in all elements of the value chain – this is also true for the suppliers.
This article is based on a presentation made by Luc Hindryckx, the Director General of ECTA, at Huawei’s Better World Summit 2020.