Vivendi: Choices for a Digital Europe

Published on

Paris, July 15, 2011

Vivendi: Choices for a Digital Europe
By Jean-Bernard Levy, René Obermann, and Ben Verwaayen*

If Europe wishes to remain competitive, a pioneer and leader of the world’s technology, media and telecommunications industries, it must seize the opportunity of implementing the best possible digital infrastructure. As Neelie Kroes, the European Commission Vice-President responsible for the communications and digital sector, has suggested, this requires investment. At stake is an increased industrial capability and, above all, an Internet of choices.

At a meeting with Commissioner Kroes, we outlined a fresh approach for meeting the exploding demand for digital connectivity and data traffic. Without a strong and timely policy, the huge potential for the next-generation Internet could be squandered.

The companies we lead are all examples of the rapidly-changing marketplace for digital communications. It is a marketplace that will create new business models, new technologies, and new opportunities for society to engage. It therefore carries high consumer and business expectations.

Our businesses and the expectations of customers are being shaped and shifted by the upheaval in the technology world. Data traffic is exploding as smart-phone usage increases hour-by-hour. Internet traffic over fixed networks is growing 35 per cent a year while data traffic via mobile networks is soaring by more than 100 per cent.

If we fail to deliver the connectivity to digital services, consumers and businesses, it will have major consequences for the Region. High-speed digital networks are key enablers for job creation, innovation and growth. Consumers and businesses will require ever-faster broadband connections in Europe. Competitiveness in Europe is therefore at stake and a prize worth fighting for.

Commissioner Kroes recognises the dangers too. As she said recently: “By 2020 I want every European to go digital, and to this end I want to make sure that my broadband targets are met”.

Those targets are highly ambitious. They require that all Europeans will have access to basic broadband by 2013 and access to Internet speeds of 30 Mbps by 2020; at the same time, more than half of all households will subscribe to Internet connections above 100 Mbps.

Critics already say the objectives are too ambitious, perhaps too geared to certain technology preferences. However we in the technology, media and telecommunication industry are determined to do all we can to help deliver on those ambitions, starting today with an open and honest debate. We are committed to supporting the Commissioner in achieving the targets of Europe’s Digital Agenda to reach global competitiveness. The objectives for 2020 can only be reached if based on sustainable business models, with more efficient use of scarce resources. A mere focus on price is definitively not the right model to strengthen Europe’s competitiveness. We wish to see a fair market in which everyone doing business in and around the Internet can do so in the knowledge that it will develop in a strong and sustainable way. We call this An Internet of Choices.

Only healthy companies that are capable and willing to invest will be able to make the necessary huge investments in high-speed networks that can provide the choice. The European Commission estimates that the roll-out of high-speed broadband to all EU households will require investments to the tune of €180 billion to €270 billion. Public funding can be an important factor in areas where a roll-out of next-generation access networks otherwise would not be possible. One thing is quite clear, though: public funding by the EU and national governments will only ever make up a very small part of the investments required. The majority of investment comes from the private sector, mainly from telecoms operators. To justify such choices, every participant in the digital supply chain – the equipment suppliers, the network operators, the content-owners and the distributors – must be able to make a reasonable return, and be willing and able to make the choices necessary to get us all there.

Investment is urgently needed in the face of new developments that will continue to pose a major challenge: The industry is expected to create the digital backbone of our future, which will see a shift from old copper fixed-line connections to the partly cloud-based digital society.

The benefits extend far beyond faster connections to entertainment and social networks. Many problems of an ageing society can only be met by using solutions which allow for new health and social services that offer real choice of service to all of us as users.

To meet these challenges, Europe needs an overarching, binding legal framework that provides the flexibility needed to adapt to regional requirements and fosters innovation and investment to meet consumer demand. Industry, policy makers and consumers agree that the continuation of the Internet success story will largely depend on the timely roll-out of the required and latest-generation fixed and mobile networks. Failure to push ahead with this roll-out would put Europe at risk of losing ground to other regions such as the US and parts of Asia-Pacific. This in turn is likely to also impact Europe’s global competitiveness before long.

For this reason it is pivotal to ensure that the future framework is based on the right conditions for the roll-out of high-speed networks and the elimination of investment barriers. The risk of investing in high-speed networks needs to be reduced. On the one hand, promoting An Internet Of Choices based on local conditions allows providers and customers to offer differentiated service choices, and secondly, promoting co-investment in regions where competing for infrastructure does not make sense. A reduction of costs in the areas of civil engineering and in-house wiring would certainly be helpful to allow the roll out into all households. In addition, we see the need to support the establishment of open and interoperable standards for an IP-based quality of service interconnection based on European standards.

Europe should seek to lead and not follow in the creation of the Internet of Choices. Europe should therefore actively promote the establishment of a dynamic market place for managed services that will allow content, applications, and services providers to offer, enhance end-user experience. This will enable consumers and businesses to benefit from highly innovative services. Meanwhile, Internet users should have the right to enjoy the widest access possible to legal content and applications through different levels of service quality.

We support the policy of European Commission Vice President Kroes, who invited us to contribute to her political agenda. Our industry is ready to take on responsibility and to make the investment choices needed. This will help Europe strengthen its global position and offer EU citizens a high speed internet that is open and accessible to all.

* The authors are the CEOs of Vivendi, Deutsche Telekom and Alcatel-Lucent, and jointly chaired a working group at the invitation of EU Commissioner Neelie Kroes

About Vivendi

The best emotions, digitally

Vivendi is at the heart of the worlds of content, platforms and interactive networks.

Vivendi combines the world leader in video games (Activision Blizzard), the world leader in music (Universal Music Group), the French leader in alternative telecoms (SFR), the Moroccan leader in telecoms (Maroc Telecom Group), the leading alternative telecoms provider in Brazil (GVT) and the French leader in pay-TV (Canal+ Group).

In 2010, Vivendi achieved revenues of €28.9 billion and adjusted net income of €2.7 billion. With operations in 77 countries, the Group has over 51,300 employees.

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