Phantom Pains in the Industry that Lost €100 Million per Day

It used to be that the internet would bring knowledge, democracy, growth, jobs and freedom to the oppressed. But yesterday, telecom organization ETNO upped the ante: now the internet will fix climate change, if only European policy-makers would ease up on legislation and free up more radio frequency spectrum for the network operators.

Everyone at the FT-ETNO summit in Brussels yesterday seemed to agree that spectrum should be harmonized across Europe and more of it be made available; policy-makers and industry CEOs alike. Digital Commissioner Mariya Gabriel called spectrum “the coal and steel of the digital times”. But the unanswered question is why member states should give up this natural resource which brings them Billions of Euros in auctions. Is the European Commission prepared to compensate member states? No answer.

Speaking of Billions of Euros, ETNO presented an Accenture-report that claims the European telecom operators have lost 100 Million Euros per day in the last decade. This is creative math of the higher order, but the argument goes like this: in 2006 the European operators took in 36% of the global revenue, ten years later only 11%. The report blames the “hesitant digitalization in Europe”. Looking closer, it’s not only competition from more lightly regulated markets in Asia and America, but also “content creators, content distributors, telecom players, digital disruptors (platforms) and device manufacturers”. Of course, a lot of these players represent new revenue streams that did not exist in 2006. With this logic, the success of – let’s say – the Iphone Appstore, Amazon or Netflix takes away from the revenue of European telecoms. Another way to put it is that the European telcos have failed to create content services, run into all kinds of trouble in emerging markets, faced more innovative competitors and hesitated to embrace new opportunities. Not all of this can be blamed on regulation. In fact, this is exactly the kind of disruption that some of the speakers celebrated. Perhaps times were better before competition? Were we witnessing the phantom pains of monopolies lost?

Speaking of trouble in emerging markets, Swedish operator Telia settled last week for 965 Million US-dollars to end US and Dutch investigation of corruption charges in its Uzbek operation. This issue was conveniently omitted in the “fireside chat” with Telia CEO Johan Dennelind. Not only did Telia bribe the ruling family to get mobile network licenses (perhaps a less sophisticated form of spectrum auction), it also worked with the Uzbek secret police to hunt down dissidents (which it also did in Turkey, Belarus and Azerbaijan). What did Telia take away from all this? That the internet brings democracy? With the settlement, Swedish prosecutors have opened a criminal investigation against former CEO Lars Nyberg and other key Telia-employees who may have been involved in the corruption scandal. Another unanswered question is whether Telia will sue Nyberg and/or others over the damage caused.

So what about climate change? Yes, the theory is that power grids can be managed more efficiently if power companies team up with telecoms. Small scale solar and wind power can fix global warming. If only more spectrum is made available…

The video stream from the FT-ETNO event can be viewed here: