Competition

Despite Brexit, Britain leaves a formidable mark on the European telecom and digital market

Schermata 2020-01-31 alle 16.40.30

While abandoning the European Union, the United Kingdom leaves behind an important legacy with regards to telecom, digital markets and their regulation. Fact is, UK has been the European member State that has pushed the most for both liberalization of telecommunications and creation of a digital single market in Europe. This occurred in the early 1990s when UK began exporting to Europe these industrial policy processes that had already been implemented during the Thatcherian period: privatizations and liberalizations. At that time UK hosted (in London, normally) the European branches of almost all US and international telephone carriers, which saw in the European market a formidable ground for expansion. But even large international corporations, from banks to financial operators, many of which were established in the UK, were pushing for liberalization of European markets, as they wished to lower phone call prices in and between European countries, and find new connectivity services available.

These modernization processes, however, were slowed down in continental Europe by historical incumbents (in Italy SIP, in France France Telecom; in Germany Deutsche Telekom etc.) normally owned by the national governments themselves. UK was different from them and therefore started to push for the first telecommunications liberalization directives (the ONP directives of the 90s) which led to the end of telephone monopolies in Europe and established the freedom to provide telephone and data services, and even to choose telephone set. Without UK, Europe would probably have been slow in liberalizing telecommunications, perpetuating gray telephones and high phone bills, as well as delaying the advent of the Internet.

The United Kingdom has also been one of the countries most attentive to telecom competition, enforcing the famous ULL (the “Unbundling of the Local Loop”, that is the rule that allows alternative operators to pass through the last mile of the incumbent operator, and thus provide final services to users) and even going so far as to impose the separation of the incumbent’s network (upon British Telecom). And in fact, United Kingdom is still now the most competitive European market at a retail level, with an incumbent market share well below 30% (in the rest of Europe it is on average around 40%). The British remedy for the separation of the telecom network was also proposed to the European partners and was actually included in the European regulatory framework of 2009, but with little practical application outside the UK, however.

UK was also in favour of light Internet regulation – in fact, in the early 2000s Internet was left largely deregulated except for a few basic rules of liability for ISPs and hosting providers (see Directive 2000/312/EC). This deregulation facilitated the boom in Internet services and the spread of digital technologies throughout Europe.

Finally, UK has been a great sponsor of the end of roaming surcharges in Europe.

All these reforms will remain and continue and produce their positive effects for European citizens and businesses, despite Brexit. However, new challenges are advancing: the emergence of online platforms and in particular global OTTs (the so-called GAFA: Google, Amazon, Facebook); cyber security issues; the race towards artificial intelligence; the need for technological sovereignty of the European Union towards the USA and China. The United Kingdom’s departure from the European Union weakens both players as the time for important choices approaches.

 

Categories: Competition

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