On May 9th, we commemorate Europe Day, marking the signing of the Schuman Declaration in 1950. This foundational document, a symbol of the EU's openness, transparency, democracy, and unity, was the stepping-stone to cooperation and peace in Europe. It paved the way for what the European Union represents today: a unified front fostering prosperity and growth.
The Single Market, one of the EU's most significant achievements, embodies this spirit of unity and cooperation. Introduced by Jacques Delors in 1985, the Single Market was a beacon of Europe's leadership in the global economy, fostering innovation and providing fertile ground for growth. In essence, the birth of the Single Market marked a new era of European integration, promising a more prosperous future for all member states.
Fast forward thirty years, the Single Market remains integral to European integration, prosperity, and solidarity. But just like Europe itself, it too must evolve with the time. Perhaps there is no better time than Europe Day to reflect on the Single Market's future, particularly in the critical sector of telecommunications.
The need for change
While the Single Market has been an engine for growth and innovation, it is a product of a much less integrated era. It came into existence when the EU and the world were "smaller", simpler, and less bound together. Today, the global landscape poses new challenges and opportunities, and Europe must adapt to stay competitive.
The telecommunications sector is a prime example of this need for change. Initially designed to protect domestic industries, the Single Market is now at odds with the swift pace of global competition and Europe’s competitiveness.
The current fragmentation of Europe's telecom market is a stark contrast to the global stage. An average European operator serves no more than 3-4 million subscribers compared to 100 million in the US and over 400 million in China. This disparity highlights the need for consolidation—a path to achieving the scale necessary for Europe's telecom operators to invest in infrastructure and innovation. Allowing consolidation could lead to the emergence of stronger pan-European operators, capable of rolling out next-generation networks and competing effectively with their global counterparts.
A call for the evolution of the Single Market
Enrico Letta, former Prime Minister of Italy, recently published a much-anticipated report advocating for the Single Market's evolution. Letta's insights stem from his travels to 65 cities over the past 7 months and 400 meetings across Europe, engaging with governments, trade unions, civil society groups, and citizens. The report, adeptly called “Much more than a market”, emphasizes the critical need for regulatory change in the telecommunications sector, identifying it as a primary reason for Europe's competitiveness loss against the US.
In the 147-page document, Letta addresses the arguments for a new Single Market that is fit for the digital age; one that can serve as a powerful catalyst for growth, prosperity, and solidarity in today's interconnected world. His comprehensive report brings to light the urgent need for reform, especially in telecommunications, offering a nuanced understanding of the challenges faced by the sector and proposes practical solutions for overcoming these hurdles.
The telecommunications sector, where liberalisation policies and pro-competitive regulation have shown promise, is ripe for change. But disparities in investments, industry and market development, and territorial coverage among member states point to a considerable investment gap.
This situation is far from ideal. The lack of scale in the European telecommunications sector not only hampers competitiveness but also delays the development and deployment of innovative solutions that can drive economic growth. To ensure Europe's competitiveness in the digital age, it is crucial to foster the growth of pan-European operators capable of competing on a global scale.
At Ericsson, we warmly welcome Letta's report. It serves as a timely reminder of the critical importance of connectivity to Europe's future competitiveness, technology leadership, and green transition. We are convinced that this sector's health and vitality are essential for Europe's ability to innovate and compete in the global economy.
The way forward
As Enrico Letta said in an interview following the launch of his report, the future of the EU lies not in copying the US model, but in creating a unified European Union in sectors like telecommunications. Europe's leaders have welcomed “More than a market” and identified investment in digital infrastructure including 5G and 6G as key drivers for a new European competitiveness deal. Prioritizing ubiquitous transformational connectivity and resetting the telecoms regulatory framework to bridge the investment gap is crucial.
This Europe Day, as we reflect on the legacy of our unified continent, let's also commit to evolving the Single Market for a competitive future. It's time to harness the potential of the telecommunications sector to build a Single Market fit for the 21st century and create a new narrative for Europe – one of growth, innovation, and competitiveness. But we must act now, for the future of Europe is digital, and it is happening now. The telecommunications revolution can no longer wait. As we commemorate the founding of the EU, let's also envision a future where Europe leads the world in telecommunications, driving economic growth and innovation on a global scale.
