Recognizing the need to expand the U.S. broadband network to ensure America’s infrastructure and economic development, Congress tasked the Federal Communications Commission (FCC) with developing a national broadband plan by February 17, 2010.[1] During the current financial crisis EU as well as the Member states wish to show that work is continuing despite the institutional deadlock of the Lisbon Treaty. Commitment to the European project is a risky path, but it is the only one that is capable of sustaining economic growth, of generating the support of the citizens, and of creating innovative jobs. New European Commission presided by José Manuel Barroso would need concrete projects and provide tangible benefits for citizens and support innovation and long term economic growth.  

In the field of the broadband access, for want of a unifying political plan and a strong economic vision, we have reached an impasse without an effective political blueprint. After the progress made by the European Union in the 1980s and 1990s, not least as a result of the Delors Commission’s initiatives, the EU has succeeded in opening up national markets. However, a true opening-up of the European market and the establishment of a single market is yet to be achieved. Recent events in several industrial sectors confirm our impression of closed national markets. The outcome of deregulation in the 1980s and 1990s has not been conclusive: in many countries former public monopolies have become private oligopolies.

 In the telecommunications sector, which lies at the heart of the European competitiveness strategy, the fact that the former monopolies have retained the infrastructures explains why the local loop often remains in the hands of the “incumbents”. A perfect solution would be the separation of infrastructure (networks) and services (content). Under such a system, the market operators would find themselves in a position of real competition. At the time of the privatisations in the telecoms sector, the solution that could have created the most competitive environment would have been the opening-up of markets and the splitting up of the former monopolies into several entities in order to separate infrastructure and services.

Alternatively, another scenario is called for: that the state could decide to retain the networks and open up these networks to all operators who offered just services. This would be the most sensible solution in order to avoid needlessly making the networks more complex and to accelerate their expansion. This problem exists in all the network industries and not just in the telecoms sector but also in the public utility services such as the supply of water, power and gas; that is to say in industries where the practicalities of setting up an infrastructure constitute a barrier to entering the market.

As far as the network industries are concerned, the current situation  – a non-existent European market coexisting with relatively open national markets – presents a real obstacle to the creation of other economic activities and the establishment of the “most competitive economy” in the world. The present system leads to overcharging and to distortion in competition. Why is it that a Belgian consumer living 19 kilometres from the French border cannot have access to the services provided by a French operator that, more often than not, is the parent company of his existing operator? Splitting up the market enables much more money to be earned by increasing the supply and playing on the differences between countries. A single transparent offer is much less interesting. This paradoxical situation underlines the difference between economic integration in the United States and in the EU.

Finally, the former “purely content” companies such as Google or even Microsoft are working to set up private networks (servers, fibre-optic and Wi-Fi networks). There is probably not a company in Europe that has the financial means to make this kind of investment profitable and that represents an opportunity for the EU-27. However, while our political representatives are very good at talking about the launch of a virtual library, American or rather global companies are actually doing it. We come back to the basic question: how can the EU support the creation of a truly integrated European market? We have some fine examples of successful cooperation. We have succeeded with GALILEO system, which is basically the combination of an infrastructure set up by public authorities and services proposed by private stakeholders. Why not apply the same methods of cooperation at EU level in the field of European broadband optical networks? Why not launch a Community project “European optical network for all” and build up the infrastructure together as a private-public partnership, and afterwards (via concessions/licensing) ask companies to offer services?

A single high-speed European network open to all content providers would avoid overcapacity and promote full and equal competition in services. The question at the moment is who is going to fund the high-speed network and will there be unbundling on this network?  Even on the old networks controlled by the established national operators, unbundling was implemented in the 1990s. The danger is either under-investment in high-speed networks (for fear of asymmetrical unbundling) or destructive and unequal overcapacity across Europe. Moreover, a high-speed network guided and coordinated by Europe fits into the Delors logic of dynamic and innovative Europe, with secondary effects on employment and growth, would restore some prestige to the European integration process, which has broken down since the 2005 referenda and consequent fatigue.

Branislav Stanicek is Administrator at the Committee of the Regions of the EU

 The views expressed herein are the personal views of the author and are not intended to reflect the views of any EU institution