A single European telecom market

The recent plan proposed by the European Commission that provides a vision for a single European market for telecoms should be considered as a breakthrough.

However, this plan is far from being implemented- and seems smoothed from earlier drafts-, and we will watch what will be left after reviews by the European Parliament and further street fighting by industry lobbies and member states. Nevertheless, for the first time we are offered a way to look at the future of telecoms at a continental level instead of summing up different specific local markets.

It has been quite a while now that the US is a single telecom market. Europe needs to leverage its scale to allow continental telecom strategies, investment, services and players in a worldwide competition.

Short term focus would be on the future disappearance of the international roaming fees in Europe, a process similar to the ones occurring anyway in other country-continent markets such as the US or India. But more important is that the project provides the ground for establishing a true European market, where players could at last leverage what is key in the telecom economics: economies of scale.

As I stated in an earlier post, the few mobile operators with a multi-domestic presence in Europe have a limited coverage: not a single one serves the 5 most important European markets: so existing players will have to adapt, and new non Europe-originated players will be able to have a comprehensive development throughout Europe, leveraging new technologies (4G, fixed/mobile convergence) at a continental level.

I believe the way is now open for building true telecom operators at continental level. However the path will be long, and players will have to constantly adapt. Large operators will have to define a pragmatic strategy to be able to provide service at continental level quickly with limitation of risks. And in this perspective I believe that mixed solution combining existing operations in some countries with new virtual network operator units in countries where the operator is not present yet will be a way forward for many players willing to provide European-wide services. Using a virtual operator model provides immediate service presence (with limited investment), while preserving options for the future (customers can be migrated to another operator later on in case the operator launches its own operations or buys an operator in a said country).

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