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Viviane Reding

Member of the European Commission responsible for Information Society and Media

The digital dividend: A unique opportunity for Europe's wireless economy

ComReg Conference "How Ireland can best benefit from its digital dividend"
Dublin, 1 October 2008

Ladies and Gentlemen,

I am delighted that ComReg, Ireland's Telecoms Regulator, has chosen the digital dividend as the theme of its annual conference 2008. This is the right topic at the right time. Preparations for the future of these frequencies are picking up pace not just in Ireland but across Europe and worldwide.

We have come a long way already. Today the debate is on how we can best use the digital dividend rather than if there is a digital dividend at all. This is already a big change. Only a short while ago some broadcasters and even some Member States denied there would even be a dividend. These voices have now faded away and the European Commission supported by most member states and now the European Parliament all recognise the strategic importance of the digital dividend.

Digital TV is more than 6 times more efficient than analogue TV, and with new digital compression techniques this efficiency gain will rise still further. The question now is how industry and society can best benefit from the digital dividend.

The dividend is a once in a lifetime opportunity that we must not waste. It is the largest amount of spectrum ever to come available at the same time and everywhere in Europe wide. And what is more, these UHF bandwidths are in the most valuable range, with very high propagation characteristics which, simply put means that the costs of rolling out new networks will be lower, the reception quality will be very, very good and we can use fewer and lower power transmitters, which is better for energy saving, lowering electro magnetic radiation and reducing unsightly radio masts.

Let us look at the potential gains. From an industrial perspective, wireless is already a big deal in Europe's economy. ComReg's recent Spectrum Management Strategy Statement 2008-2010 points this out very clearly. For Ireland, spectrum related services accounted for nearly 2% of GDP in 2006 mostly from mobile services (€1.4 billion) but also broadcasting (€ 0.3 billion). This is just the start. The social and economic impact of the dividend could be huge. Study after study points towards economic benefits of billions of euros a year. I don't need to remind you that this is something we need as we coast towards a significant slowdown of growth in the EU.

Remember also that the mobile telecoms industry is a big money spinner for Europe. We in Europe set the global standard with GSM. We have the world's leading mobile telecoms manufacturers generating billions of euros and millions of jobs. Europe is also leading the world in mobile use. Wireless services are rising 10% per year and by 2010 will have surpassed fixed networks to achieve 55 percent of worldwide telecoms revenues.

Meanwhile wireless communications are getting faster – up to the levels of today's typical broadband connection (2 megabits) – which means the distinction between wired and wireless is blurring. Wireless is becoming a true alternative to wired.

This provides us with a remarkable competition conclusion: as wireless broadband speeds start to match wired broadband we will have a second infrastructure capable of competing with the traditional telco incumbent. Imagine if we could move from today's situation in Europe, where only about 20% of the market has a real alternative infrastructure, to a future where 80% or more of European's have a choice. This would mean more competition, permit lighter regulation and would spur the fixed network operators to move to next generation access so as to differentiate themselves from the threat of the mobile competitors.

But if we want to see this growth in one of Europe's strategic tech sectors, if we want wireless broadband to stand up as a competitor to fixed networks, we need the bandwidth. We need the spectrum. We need to use this digital dividend opportunity. And we need to use it now.

The gains are not just in the economy. There are also many applications that will be crucial for public services. I give you an example: public safety services (such as fire or ambulance or flood prevention) are very often using fragmented bandwidths and old analogue technologies. They rarely have the bandwidth they need to set up mobile broadband services for teams facing natural disasters or terrorist threats. The communication systems are often poorly integrated between agencies especially cross-border and remember: natural disasters do not necessarily respect human made boundaries. The digital dividend provides an opportunity to build these crucial first response teams with a state-of-the-art infrastructure to meet our needs in times of crisis. Can we afford to pass up this chance?

Let me give you another example – highly relevant to Ireland. I have read with interest the Irish government's new consultation paper on high speed broadband published yesterday. First, Ireland is well placed to benefit from the digital dividend because, as an island it faces fewer problems of interference. So there is an opportunity. And there is also a need. The report points out because Ireland has so many remote and rural communities the copper local loops on the fixed telecoms networks are longer than normal; 2.7 km on average) and in some cases up to 9km. This means that many subscribers cannot be reached by high speed internet, at least not at an economic cost. This is where wireless broadband steps in and where the digital dividend can make the difference.

I firmly believe that it won't be long before the high speed internet will be essential for a full participation in society – for social and family networking, for dealing with government on line, for e-commerce, for e-learning and for small rural businesses or getting job opportunities into the villages and hamlets. Can we afford not to take these opportunities, not just in Ireland but in all countries that have a big rural population that will otherwise be consigned to the slow lane of the web economy?

The public interest is also being served by broadcasters. We all welcome television services into our homes and, even in the age of social networking, television plays an important social and cultural role. The private broadcasters have a strong economic role and all broadcasters serve the public interest through their support for production of creative content, for the news services they provide, for the entertainment and education they deliver. The broadcasters are pillars of our society. So it is obvious that broadcasters have a strong claim on the use of the frequencies being liberated.

So my conclusion is that we policy makers must balance the competing claims for the use of the digital dividend very carefully. We must take very seriously the provisions of the EU regulatory framework. Indeed, the law requires that the allocation and assignment of radio frequencies is made on objective, transparent, non-discriminatory and proportionate criteria, and to ensure a competitive environment. This means we have a moral duty and also a legal obligation to balance different concerns: the economy, public service requirements and ensuring cultural diversity and media pluralism.

For me, the conclusion is clear: broadcasting must get an important share of the digital dividend so that it can develop new services, in particular High Definition TV and also interactive services and mobile TV. But it is also clear that we also need to reserve a large share of the dividend for other public interest services and for stimulating economic growth.

This is certainly not the time to delay. Outside Europe, things are moving ahead. The success of the recent auctions in the US of the 700 MHz bands shows the demand for spectrum. In Japan, 60 MHz of UHF spectrum have already been earmarked for re-allocation and an additional 70 MHz of VHF spectrum are under discussion. These bold steps will give the countries that take them a competitive edge in launching innovative services. Europe cannot afford to stay on the sidelines.

In Europe, first cautious steps are being taken now. Several Member States have already announced plans for the first fruits of the digital dividend. In the UK, 112 MHz is being earmarked for open auctions. Sweden had earmarked 152 MHz for opening up but stepped back to re-allocate only 72 MHz in the first wave. France has advanced plans similar to those in Sweden.

Here in Ireland, the Broadcasting Commission has assigned four national digital multiplexes, meaning that a significant spectrum bonus for other uses such as mobile TV or wireless broadband access is still open.

Overall, existing plans in Member States (where there are movements) indicate the allocation of 20 to 25% of the UHF spectrum as an initial digital dividend. Altogether this adds up to over 100 MHz of prime spectrum for new wireless services: more than the original spectrum allocation for GSM.

There is already a first group of Member States including Sweden, France and possibly soon Germany that are starting to adhere to the Commission's proposal to introduce wireless communications in the upper part of the UHF band.

But are these cautious steps enough to secure Europe's position as the world's wireless champion, to build an alternative second broadband infrastructure, to bring new public services on stream, to bring "broadband to all" including remote farms and rural villages?

Don't you think we could move ahead with a bit more confidence? Should not Europe be capable of leadership?

I have two suggestions to make:

First, let us jointly choose a political figure for the distribution of the digital dividend. I propose a "fair play" 50:50 rule. That is half the dividend for the broadcasters and half the dividend for the new users. A bold step like this will show the world that we mean business. This is the only way we will cut the knot and make real progress.

Second, let's move ahead together. On spectrum, together Europe is strong, divided it will fail to reap the rewards of the digital dividend.

I say this for two reasons. First of all, a coordinated approach on the split between high power (i.e. broadcast) and lower power (i.e. communication) networks will mean significant efficiency gains in spectrum use and in the economic case for wireless services. Spectrum sharing between fundamentally different networks, which will happen if we do not coordinate, will waste a large part of the digital dividend.

Secondly, not all Member States can get on the same timetable for switchover, but if they are at least on the same trajectory, investors and consumers will have a massive scale economy at their fingertips. Member States cannot build these markets single-handedly. The risks are too large and progress will be too slow even in larger Member States. And once again time is short, if Europe wants first mover advantages. There are hundreds of wideband mobile handset models already available commercially outside Europe compared to just a handful in the EU. This is why I call on all Member States to move quickly. To realise the digital dividend the switch off of analogue television should take place sooner rather than later, ideally by 2010. I call in particular on Ireland to complete its transition to digital TV at the very latest by 2012.

By proposing coordination, I am not proposing a "one size fits all" straightjacket. We need a balance between national flexibility and EU level synergies at EU level. Let us opt for the "win/win."

Let me summarise what the Commission proposed in our telecoms reform proposals in November last year as regards the coordination of spectrum. We said what is needed is a deal brokered in the Council amongst all Member States based on a solid proposal from the Commission. This deal should determine which frequency ranges should be set aside for the digital dividend and what the conditions should be for selecting and using these bands. The European Parliament should be fully involved in this deal.

Now the detailed Council conclusions in June and the Parliamentary resolution last week, were largely in line with the Commission's proposals on the digital dividend. What we are still lacking is a regulatory tool which can make these wireless dreams come true. I believe that the Spectrum Action Plan proposed last week by the European Parliament could be a good way of agreeing an overall spectrum strategy for Europe – if we get it done quickly.

But we need more than just nice plans and words that say they see the need for the digital dividend: we need action as well Parliament and Member States must back their words with deeds by responding adequately to the Commission's proposals on the Authorisation Directive. We need a mechanism that can deliver the coordination that we need to unlock the economic and social value of the dividend.

As we now prepare the next steps of Europe's strategy for the digital dividend, we will be working with key stakeholders and with experts from national administrations. I hope that by the Telecoms Council in November, we will be able to report progress on all these fronts. That Member States will have shown their desire to make a bold, coordinated move, especially by embracing the fair play 50:50 rule in balancing the interests of broadcasters and of innovative mobile and wireless services when allocating the digital dividend.

Only an ambitious strategy will give us a "Wireless Europe", with new services, an impetus to growth and jobs and the real possibility to achieve broadband for all Europeans at the end of this decade.

I would like to encourage Ireland to lead by example in this debate on Europe's digital dividend. Fast decisions on the digital dividend could enable Ireland to transform swiftly into the Celtic Tiger of the wireless Europe.

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