Panellists:
Markus Wagemann Head of Telecoms, German Federal Cartel Office
Manuel Kohnstamm Chief Policy Officer, Liberty Global
Ben Wreschner Head of Regulatory Economics, Vodafone Group
Fernando Borjon Commissioner, IFT (Mexico’s new telecoms…
Panellists:
- Markus Wagemann
Head of Telecoms, German Federal Cartel Office - Manuel Kohnstamm
Chief Policy Officer, Liberty Global - Ben Wreschner
Head of Regulatory Economics, Vodafone Group - Fernando Borjon
Commissioner, IFT (Mexico’s new telecoms regulator) - Gita Sorensen
Director Communications & Media and Economic Regulation, Berkeley Research Group -
Jan Willem van den Bos
Head of Telecom Group UKMEA, Dentons (moderator)
Regulation will continue to be at the forefront of European consolidation in 2014, but there was more to this panel than just ‘four-to-three’. Speaking at the TelecomFinance 2014 Conference, which took place on 30 January in London, the panellists discussed how regulators were shaping the future of telecoms and the challenges which their rules could pose for operators and investors.
The panel began with a presentation from Luis Fernando Borjon Figueroa, a commissioner with Mexico’s newly-formed Instituto Federal de Telecomunicaciones (IFT). The IFT, designed to be stronger than its predecessor, is looking to level the playing field in Mexican telecommunications, which is dominated by America Movil.
Borjon explained that the foreign investment threshold has risen from 49% to 100% in a bid to encourage outside investment, and that the IFT is taking a number of other steps to stoke competition.
The moderator Jan Willem van den Bos, Dentons’ head of telecoms group UKMEA, then kicked off the discussion by asking the other panellists if there was too much competition across Europe.
Manuel Kohnstamm, chief policy officer at Liberty Global, was the first to jump in. He said there was too much fragmentation and not enough scaled operators, and pointed out that, in cable, there was more than 7,000 operators across Europe, describing it as a “huge jigsaw that we need to stitch together”.
Kohnstamm said he acknowledged Borjon’s desire to have a strong regulator, but noted that from the perspective of large operators in Europe and America, it was more important to have a very predictable body which gives absolute certainty to plot strategies into the future.
Van den Bos asked Markus Wagemann, the German Federal Cartel Office’s head of telecoms, how a regulator goes about creating certainty. Wagemann said it was not that simple as it had to take potential transactions on a case-by-case basis, and added that in Germany the market was not that fragmented and did not need major consolidation.
Cross-border consolidation
The discussion moved to the fragmentation of mobile operators across European Union member states, and Brussels’ perception of pan-European mobile operators.
Ben Wreschner, Vodafone’s head of regulatory economics, said his group was present in more EU countries than any other telco, but that to go from operating in 12 countries to 28 was a big leap. Wreschner suggested that operators would look at in-market and convergence deals before they considered cross-border consolidation. He also said that the only real pan-European consolidation at the moment involved cable, and that content had been the key catalyst due to the economies of scale.
Wreschner suggested that because content can move freely across geographies, it had stimulated cross-border consolidation. He went on to say that to see a similar phenomenon in mobile, the European Commission would have to see telecoms and competition dealt with by the same people to get to a “holistic view” of how the market should be structured.
Kohnstamm said that alongside content, the need to technically innovate was also why cablecos needed to consolidate in order to compete with OTT services coming via broadband. The Liberty executive added that he was “absolutely convinced” that very few cable operators will survive the next 10 years without being part of a major group.
Gita Sorensen joined the debate and suggested that converged consolidation created competition in itself as it differentiated operators through their complementary services, giving consumers more choice, and that she had not seen the EC look at this.
Four to three
Inevitably, the question of whether regulators would allow consolidation resulting in a market shrunk from four players to three came up. Wreschner said the most important developments to watch out for in the next six months were the outcomes of the EC’s reviews of the big mobile mergers in Ireland and Germany. He stressed that if they go through then it will signal that “consolidation” is not a dirty word. If significant remedies are imposed or if they are rejected outright, then it will give a clear indication of where the policymakers see the scope for consolidation. Kohnstamm said it would be interesting to see if the EC drew a common line throughout all the European territories
Wreschner added that regulators needed to stop getting hung-up on the price of a text or a megabyte of data, and start to look more at the quality of networks and what operators are charging for. He said the advent of 4G meant customers were more aware than ever about the quality of different networks, creating competition.
According to Wagemann, four-to-three remains a key issue, but another problem in Germany is larger operators becoming too dependent on Deutsche Telekom’s network.
Van den Bos closed the panel saying regulatory authorities are no longer the “ugly duckling” that they used to be, but that regulators will be there until competition is achieved.
