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European Commission - Speech - [Check Against Delivery]

Change and Innovation: Speech by Commissioner Günther H. Oettinger at Cable Europe annual event

Brussels, 03 December 2014

Günther OETTINGER - Digital Economy and Society

Ladies and gentlemen,

Thank you for the introduction, and for inviting me here today.

The theme of today's event is "change and innovation". This could not be more appropriate, given that we are indeed in times of great change – and I don't just mean inside the Commission!

You don't need me to tell you that the telecom industry is changing every day. New technologies, innovations, and business models are constantly emerging.

I am very interested to hear about the new European Broadband Cable Yearbook – I'm sure the figures will be very helpful in our work.

And as a relative newcomer to digital, what strikes me is the importance of achieving the right balance: on the one hand allowing companies the freedom to grow, innovate, and give a much-needed boost to the European economy; and on the other hand, making sure there is a level playing field, sufficient competition, and checks and balances where there should be.

Allow me first to speak about the over-arching theme of today – innovation - and how the European Commission is supporting inventors, SMEs, and start-ups.

We know that ICT is responsible for half of productivity growth in the EU, and the digital sector is expected to grow seven times faster than the overall EU economy. So we must support innovation if we want this trend to continue.

For start-ups and SMEs, our initiative "Start-Up Europe" offers a platform for sharing knowledge, offering advice on how to secure funding, how to navigate legislation, and how to scale up your business. This is an example of where the Commission provides resources and expertise, rather than funding, to achieve results.

Another successful programme is the Grand Coalition for Digital Jobs and Skills, launched in 2013. Big names such as Google, Microsoft, Samsung and Liberty Global, as well as many small and medium sized companies, have made pledges to provide training and job opportunities for Europeans, and it's already taking effect with thousands of extra digital jobs and internships filled. The Commission facilitates this partnership, but the real commitment comes from industry.

In terms of European funds, Horizon 2020 investment in ICT Research and Investment will amount to 12.5 billion euros between 2014 and 2020. This funding will help take ideas "from the lab to the market": from electric cars, to robots who can help care for the elderly.

5.5 billion euros will go towards public-private partnerships in 5G, robotics, photonics, Factory of the Future, high performance computing, and big data; with thousands of stakeholders working together, pushing the boundaries of what can be achieved. And to allow true innovation you need open access: sharing knowledge and reaping the benefits of big data.

The rest of the funding will be spent on projects supporting new cross-cutting initiatives such as Internet of Things and Cyber Security and on projects in Health, Inclusive and innovative Society, e-Infrastructures and Future and Emerging Technologies including our flagship programmes such as the Human Brain Project and Graphene. These are remarkable research programmes which involve collaboration at an unprecedented scale, all of which will help boost the EU's economy.

But innovation must lead to investment, so let me now move on to the question of investment in the telecom sector. I know that cable has played an important role in delivering our Digital Agenda broadband targets, and we will continue to rely on you in the coming years.

And it is right that investment should come from industry. But in recent times, we haven't seen as much investment as we would like – or as much as we really need – if we are to meet our targets of getting every European digital, and regaining our position as global leaders in the digital economy.

With that in mind, the European Commission's aim is to provide all the right conditions, and incentives, for investment. That is why last week President Juncker launched the 315 billion euro Investment Plan to get Europe growing again.

The new European Fund for Strategic Investments (EFSI), which will be set up within the European Investment Bank, will have a 16 billion euro guarantee from the EU budget and 5 billion euro contribution by the EIB. Additionally, Member States will have the opportunity to contribute to the Fund by paying in capital.

The announcement of the Fund is good news for broadband and digital infrastructure projects which can be financed through financial instruments. In particular rolling out high-speed internet networks is essential to foster innovation and productivity and help restoring Europe's competitiveness.

But this is not the only thing that the European Commission has done to help encourage investment in high speed broadband networks – the backbone of our economy, and our daily lives.

In late 2013 the Commission came forward with a Recommendation on costing and non-discrimination. This gives an integrated set of pro-competitive rules that will last until at least 2020, giving market players stability and legal certainty over their revenue streams.

The Recommendation stabilises prices for the 'old' copper networks and ensures consistent broadband access pricing across Member States.

In return for the increased safeguards provided by the stricter non-discrimination rules, investing operators get the necessary pricing flexibility to experiment with pricing schemes for Next Generation Access services to meet demand.

The Recommendation will also help ensure that regulatory intervention only takes place where it is most useful for alternative operators, and least burdensome to incumbents' normal commercial activities.

Secondly, the Directive on broadband cost reduction adopted earlier this year will improve access to networks, guarantee better coordination of civil works - including across utilities - streamline permit granting and equipment for building high speed networks. The implementation of the directive will allow for up to 30% savings in the total investment costs.

Thirdly, in October we adopted a revised Recommendation on Relevant Markets Susceptible to Ex-Ante Regulation. The recommendation is a further step towards liberalisation of the sector, as two markets were removed from the list. We also redefined the boundaries of broadband markets and recognized that “virtual access products” can be considered substitutes to physical unbundling when they fulfil certain characteristics.

These measures may not be as well-known or discussed in the media as, say, the Telecoms Single Market package – but they will make a real difference for companies, and are a crucial part of the puzzle.

Now I know you want to know my views on regulation, and talking of the Telecoms Single Market package, let me use this opportunity to tell you about the work my colleague Andrus Ansip and I want to take forward in the coming months.

I think everyone in this room would agree on the need to complete the digital single market for the simple reason that it will make life easier – and more profitable – for businesses throughout the EU. You don't have to be an industry expert to understand that breaking down virtual barriers, and cutting red tape, will reduce administrative burdens which might be hindering businesses from expanding or doing business across all the EU.

Why deal with 28 different sets of rules, when one is so much quicker?

Today an SME that wants to sell across the EU is faced with 28 different sets of rules in areas like data protection, contract law or even consumer rules.

Why limit your product to one country, when you have a whole continent full of potential customers?

But today consumers are penalised - by being redirected to their national web site, being geo blocked, having their credit card refused, or experience excessive shipping costs.

So there is a need to get this right. And of course this positive effect will be felt by our 510 million citizens who don't see the complicated rule-making processes that you and I are privy to: they simply expect instant, unfaltering, high-quality services at their fingertips, 24/7.

Plans for a Digital Single Market will be included in the Commission Work Programme in mid-December, with the aim of presenting the strategy for a European Digital Single Market in the first half of next year.

But first things first. We must first finalise the work on the Telecoms Single Market package. Without a telecom single market, we cannot achieve a digital single market.

At the Telecoms Council last week which I attended, Member States sent a clear call to intensify and quickly complete the discussions at technical level in order to start negotiations with Parliament as soon as possible.

Once this is done, and in the course of 2015, in the context of the Digital Single Market, we will be launching a full review of the EU regulatory framework for electronic communications to see what needs to be adapted in this ever-changing sector. There will be amble opportunities for you to express your views through the relevant consultation mechanisms and I will be looking forward to your input. I'm thus not going to pre-empt that review here today.

Going back to the Telecoms Single Market, besides the end of roaming and more coordination in spectrum one very important part of the package is of course net neutrality. The European Commission's position on net neutrality has been articulated many times, but allow me to do so once again for clarity.

In an open Internet everyone should have access to services and applications without being blocked. Content and application providers will have guaranteed access to end-users.

At the same time, we need a balanced approach: on the one hand no blocking or throttling of online content, applications and services, while at the same time guaranteeing efficient network management, and leaving space for continued network and service innovation.

The rules will need to allow the provision of innovative services, such as IPTV or other services that can emerge in the future, on condition that these do not harm the open Internet.

It is clear however that such services that require a certain transmission quality in order to work (so-called "Specialised services", such as IPTV or critical emergency or health applications) must not come at the expense of the quality of the Internet connection already paid for by other customers.

As you know, this is an ongoing discussion between the legislators. I am looking forward to mediating between the Council's emerging position and that voted by the Parliament in April.

Unfortunately I am not able to stay for the rest of the event today but I look forward to meeting with many of you in the future.

Thank you.


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