UK EU presidency i 2010 conference 6 September 2005, London Ewan Sutherland

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Good afternoon ladies and gentlemen

I believe my brief is to stir things, to utter heresies, to challenge sacred cows and vested interests for the debate we are to have later. 

Let us be honest, the eEurope programme ran out of steam. It was collateral damage from the dot.bomb, the collapse of the dot.com hype market. Politicians stopped being interested in e-commerce. eEurope is now replaced by i2010, information having replaced electronic.

I am personally far from convinced that i2010 is going to contribute to the achievement of the Lisbon goals to the extent we need or that the sector might deliver.

As the Chancellor of the Exchequer has said to have twenty million people unemployed in the European Union is simply not acceptable, socially or economically.

Do we really believe that i2010 will make a significant dent in that total? Ten percent or two million new jobs would seem a reasonable contribution from the ICT sector. I do not see that coming any time soon.

Cynically, one might suggest that after e and i policies, we will have o for optical and then u for ubiquitous. Yet, our rivals in Asia are already implementing carefully formulated ubiquitous policies. Japan has already hosted a conference on the ubiquitous network society last May, reflecting its confidence in the U-Japan policy. Korea also has a U-Korea policy.

Dr Chin this morning spoke about the 839 policy of the Republic of Korea. It is based on a very thorough analysis aimed at delivering real economic growth, not least to increase GDP per capita to US$ 20,000.

If Europe truly aspires to global leadership then it requires a set of metrics that we can use to measure progress against Asia.

It also requires a semblance of coherence in the implementation of policies within the twenty-five member states and, presently, two accession countries, plus the countries in the European Economic Area..

Today we have neither! The member states do not believe in coherence, they prefer diversity and dissonance. Some member states seem utterly unashamed of being underperformers in ICTs. The details were recently set out by the OECD in Communications Outlook 2005.

At the heart of the policies must be truly competitive markets.

I do not mean clever regulation. I certainly do not mean a mountain of documents that prove, to the satisfaction of the courts, that the markets are not uncompetitive.

The operators will promise the earth. But operators only ever deliver when possessed of a very real fear of their competitors.

We need more competition, much more. It is that competition that is the prerequisite for "light regulation". Regulation substitutes for competition and can be lifted only when there is sufficient competition. If we need more regulation to get competition, then so be it. It is a small price to pay.

Now I run risk intruding on the parallel session run by Sir David Smith.

Last November, speaking at IST 2004, I set out where the rest of the world was in the adoption of ICTs, where the cutting edge of the market was (see my presentation).

R&D must be linked to where the markets are and how innovations can be turned into a mass market in short order. One of the failings in Europe has been the feeling that we can take a decade or two to deploy a technology. Others have moved much faster and have achieved economies of scale.

GSM has been the showcase, the archetype of European high technology planning. Yet, it has faltered and is failing as a policy model.

The centre of gravity of the GSM world has moved to China. That is where developments are being driven, in a single market of almost four hundred million GSM customers and a further 1,000 million potential GSM customers.

The centre of gravity of 3G is Japan-Korea, with twenty and five million customers respectively already using the technology. Europe, though more than twice the population, cannot catch up for a further eighteen months.

3G lies at the heart of the policy debate, that is third generation cellular wireless.

3G is variously said to stand for Games, Gambling and Girls, the supposed revenue sources, or Greed, Gullibility and Grief, the fate of those who gambled £20 billions on its success in the UK.

The handsets of nearly everyone in this room are able to work with GPRS, yet hardly anyone does or even knows how. 2.5G  was a generation of technology that was lost. Yet where are the analyses of that failure? Where is the mea culpa of the operators?

We need to accept that 3G went badly wrong. We need to admit that the lessons of 2G and 2.5G were misunderstood and led directly to the faltering of 3G.

We need to be open about this in the policy debate.

unbundling

Let me pick on one operator, in this case Telecom Italia. It sells broadband under the brand of Alice, personified by a rather sultry woman. The service varies greatly. In Germany, it costs € 21.90 for 2 Mbps, while in France it costs € 29.95 for 8 Mbps and in Italy it charges € 36.95 for 4 Mbps. So price and speed reflect neither technology nor control of infrastucture but only competition! Italy needs more competition to get lower prices and higher speeds.

Additionally, in France the price includes all calls to the fixed network. Voice telephony is fast becoming a montly subscription item. A mere commodity.

Too much of the policy work has been focused on "broadband" in the sense of a residential service. We require a multiplicity of networks, wired and wireless, cellular, hot spot and broadcast. That means we need to address some horrendously complicated issues of access and interconnection and we need to start now.

It is perfectly clear that no single network can deliver all the possible services. Certainly not 3GSM, which can manage voice, but only a pale reflection of the 100 Megabits per second speeds of fixed broadband. 

In Hong Kong you can already get residential Gigabit Ethernet (see HKBN), that is 1,000 Megabits per second.

Mobile data continues to be priced like something that is intensely precious in dramatic contrast to fixed networks.

Even with HSDPA, 3GSM will struggle to deliver 5 Mbps and then neither for large numbers of users nor at affordable prices.

The boosters of WiMAX are not entirely convincing, it is an important technology, but alone it is insufficient.

We saw a demonstration this morning of Korean terrestrial Digital Multimedia Broadcasting (t-DMB) technology on handsets that combine 3G cellular and DMB for streaming entertainment services.

This poses, together with DAB, a threat to 3GSM in taking away monies that the operators thought they had in the bag.

There are many EU member states that are performing incredibly badly on broadband, countries that are dragging Europe back. Yet a few have already made local loop unbundling work and others have deployed 450 MHz broadband services.

Let me utter one heresy, I do not believe in "ladders of investment".

I do not doubt that theoretical economic ladders might have some value, but they are not real. The catch has been that the game is played with snakes. The changes in technology and services mean that the target is constantly changing. It is no longer simple voice telephony, nor is it merely broadband, it is broadband with VoIP and IP television thrown in. That will change again and again. As a policy model a static ladder is demonstrably absurd - you would need a Salvador Dali ladder, something that twists and distorts.
While I am dealing in heresies, let me deal with "regulatory certainty".

Here in London, we should remember why we introduced liberalisation and competition, it was because bureaucrats were less able than markets to adjust to technological change. So, we game operators a free hand, within markets, to respond to technological change.

That they now ask for certainty is at best naughty and at worst, self-serving. The clear intention of incumbent operators, both fixed and mobile is to disadvantage rivals. Certainly, they all want a level playing field. But it is one under which their competitors lie buried.

We need to set broad policy principles, not detailed and fixed rules. The reason is that policy-makers not know, they cannot be certain about the future. That is why we introduced markets.

One aim for the EU that was set many years ago was the creation of a single market. Yet telecommunications remains a remarkably nationalistic set of markets. It is something incumbent operators and national regulators strive to maintain.

The worst in this respect are the mobile operators who entirely deny they have pan-European networks, charging excessive prices to move from one part of the network to another.

I gave a presentation yesterday on the evils of international mobile roaming charges. Today, I will spare you the details.

Europe needs the competition that only a single market can deliver.

Europe needs the economies of scale that only a single market can deliver.

Without that single market in telecommunications, Europe cannot create single markets in all the other sectors of the economy.

The European Union risks slipping yet further behind its economic rivals.

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