The European Commission’s White Paper on Connectivity is not representative of the market reality and its proposals could cause significant damage to Europe’s digitalisation goals. This was the view of a broad church of stakeholders — including industry players, consumers, and national and international regulators meeting at this week’s “Regulation Reloaded – Changing the Rulebook of Electronic Communications?” summit hosted by the Hungarian EU Presidency.
Flawed hypothesis – flawed recommendations
The Commission White Paper set out far-reaching views and audacious policy proposals to guide the future of digital networks. However, the clear message from this week’s event was that the White Paper’s hypothesis of telco-cloud convergence is flawed and overly simplistic. Much of the criticism has centred on its proposal to apply ISP-style regulation to cloud providers, a move most see as unwarranted.
Moreover, several participants questioned the White Paper’s claim of market failure in the telecom sector. While the Commission argues that incumbents must be supported so that they can afford to invest in new infrastructures, alternative voices highlighted significant investments made by non-incumbent players, including cloud and CDN providers. These participants also noted that most issues stem from lack of demand, not lack of funding.
This unprecedented consensus of opinion sends a strong message to the Council of the EU, currently working on its Conclusions in response to the White Paper.
Unifying cloud and ISP regulation could be catastrophic
During the event, many stakeholders argued convincingly that cloud services operate on a fundamentally different model to ISPs, which makes applying the same regulatory regime problematic at best, and catastrophic for the EU’s dynamic cloud sector at worst. Speaker after speaker underlined that the cloud is a diverse and cross-sector service integral to many different verticals from the financial to the public sectors. They also reiterated that cloud providers are already subject to robust horizontal regulations, such as the GDPR, NIS2 or the Data Act. Expanding additional regulations, initially drafted for the specific issues of telecoms sector, will increase costs and stifle innovation, ultimately harming EU consumers and businesses. Inadvertently, the weight of these regulatory burdens falls disproportionately on small innovative European providers who are essential to growth, innovation and diversity of a European digital economy.
Leveraging Europe’s success
For CISPE, the main underlying message from the event was that Europe’s digital future must not be shaped by additional regulatory burden, especially not by a one-size-fits-all regulatory approach for cloud and telcos. The Commission should instead focus on the fair and effective implementation of recently adopted regulatory rules. If any additional rules are proposed – on which the Commission seems set – they must be based on an evidence-based view of the market, rather than questionable narratives pushed by certain established players in the telco sector.
Europe has a diverse and innovative cloud sector which, although fragmented, has the capacity and the capability to compete with the best globally. Creating regulatory environments that promote rather than penalise the effective application of European values into cloud services whilst meeting the need of customers and offering real choice, should be the focus of the new administration.
As the Council prepares its conclusions on the White Paper, it will need to weigh these concerns carefully. The strong pushback presented at the event suggests that a significant rethinking of the White Paper’s proposals may be necessary if the EU is to meet its ambitious Digital Decade targets without stifling competition and innovation in the process.
You can read CISPE’s comments on the Commission’s White Paper on this link.