The false dichotomy of competition vs. investment

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I spent last week in Europe, in between Stockholm, Brussels and Paris and most of the topics I discussed, heard or addressed in public were in one way or another about policy. One thing that struck me is how the false dichotomy of competition vs. investment in the market is alive and well. We know where it comes from: mostly incumbent lobbying, with competitive operators sitting on the fence, not quite sure if they buy it, but not quite sure either whether they should disprove it.

What I found the most astonishing though is that every policy expert I spoke to (except ones clearly aligned with incumbents) or heard talk at the ECTA annual conference was adamantly clear that the dichotomy is false. Here are a few of the quotes I tweeted from the ECTA event :

 

 

The quote from Ofcom might be considered surprising when one looks at how the UK Regulator has worked with BT to institute an unseparated infrastructure monopoly there (and competitive operators are finally starting to get their act together in denouncing this) but it’s hard to contest that it’s true.

So here’s the conundrum: all of those who have looked into this market with even a modicum of independence know that the dichotomy is false. This includes regulators and most EU policy makers at the operational levels. Why then does it still pervade actual policy making and press coverage? How come the French government wants to reduce the number of mobile players in the market? How come the Dutch regulator refuses to open up cable networks despite evidence that it’s feasible and done elsewhere (I’ll come back to that one)? How come the first blog post of the incoming commissioner frames exactly that false dichotomy as a solution (see my response to that here) ?

The first and most likely answer is “lobbying”. Incumbent lobbying is massive, loud and targets just the right people. In particular, it targets the press, and the press is always after a “balanced view”, this false intellectual construction that dictates that no matter what the argument on one side is, the argument on the other side is at least equally valid. So it seems that in the higher echelons of regulatory and policy decision making, the ultimate decision makers listen to the press and the lobbyists, but not to their own people. That is sad, and I really feel for the people working in these organizations.

I mean, here we have virtually every independent expert in Europe saying that the single digital market will not be of any use if infrastructure investment is what we are after, and yet every sign and message of the new incoming commission, from Oettinger all the way up to Juncker himself is that we need to allow more consolidation in Europe and less players in each market.

What are we doing wrong? How can we collectively broadcast the message loud and clear that the dichotomy is false? That investment in the telecom sector will not be achieved through consolidation? Is our telecom policy destined to fatten dividends?

I don’t have the answers. At our own little level, we at Diffraction Analysis are pushing what we believe to be the right messages, backed by unbiased research. But we’re really small, and our ability to be heard is extremely limited. Someone last week commended us on our Structural Separation work, and added: “what’s the plan now? How do you put this on the agenda, and how does it play out if you manage to do it?”

The short answer is “I don’t know”. But I would clearly like to start a discussion about this, and I’d welcome any ideas and opinions from those who, like me, believe that some of our issues can be solved by policy, only a policy that is independent from the pervading incumbent’s worldview. Please let me know what you think about how things could be pushed forward in the right direction.

 

Photo: (cc) Mary Beth Griffo Rigby