|Europe I 2010
|Global communications – connecting everything and everybody
|Chairman and CEO
|by Matthew Key, Chairman and CEO Telefónica Europe
Matthew Key is the Chairman and CEO of Telefónica Europe and a member of the Telefónica, SA. Executive Committee. Prior to his current position, Mr Key was the CEO of Telefónica’s UK business. Mr Key joined Telefónicas Chief Financial Officer, where he was responsible for strategy, business development, regulatory functions and the establishment of the Tesco Mobile joint venture. Before joining Telefónica’s O2 group, Mr. Key worked with Vodafone as UK Operations Finance Director. He has also held various financial positions with Kingfisher, Coca-Cola, Schweppes and Grand Metropolitan. Matthew Key holds a Bachelor’s Degree from the University of Birmingham, UK
Today’s economic downturn is not slowing the digital revolution. Other industries have faltered, but the Information Communications Technology (ICT) sector is a driver of economic recovery. Still, there are significant challenges to overcome if ICT is to remain an engine of European economic growth including addressing regulatory issues to safeguard future investment in technology. The wireless sector needs to rise to its own particular set of challenges to survive, particularly in the way it engages with customers, stakeholders and regulators.
It is universally acknowledged that future global communications is quickly evolving into a world where everything and everybody will be connected. Social networking will be extended even further than it is today, user generated content and the availability of digital content available online will continue to grow at unprecedented rates. In this connected world we will see a lot more digital content and services available online, and far more accessible regardless of location or time of day. Communications today is no longer a question of connectivity or technology, even if higher speeds and wider coverage may make a real difference. A connected world will be made up of many different technologies – cellular and WiFi, fixed-line telephony and broadband, Bluetooth and wireless. More machines and appliances, both indoor and outdoor, will be connected to make everyday life easier and more efficient for all of us. We will see further advances in e-health, e-learning, e-financial services, e-travel and more. Behind the scenes, machine-to-machine applications such as smart metering, e-car, e-logistic, and vending solutions – to name just a few – will be quietly streamlining our day-to-day lives. Customers will increasingly need to enjoy the benefits of technology wherever they are. They demand round-the-clock information – whether it’s Internet on the move, unlimited access to entertainment media or office documents at their fingertips. First, our industry needs to address significant challenges for this new world of communications to become reality. Firstly, in Europe, it is critical that we achieve the right political and regulatory environment to foster investments in new high-speed telecommunications networks. The ICT industry needs to work more closely than ever with European policymakers to focus its efforts on speeding up the rollout of the next generation networks that lie at the heart of a future knowledge-based society and economy. Second – looking inwards – our industry will need to review the way it does business. Telecommunications is critically important to Europe, where it is one of the most productive economic sectors, twice as productive as the European average. In addition, the telecoms sector is an engine for economic recovery and growth. As Dr Hamadoun Touré, Secretary General of the ITU, remarked during his opening speech at ITU World 2009 in October, “Investments in ICT and broadband networks have a major role to play in any stimulus plan. They often promise stronger marginal returns on supply and greater productivity gains than other forms of infrastructure. Next-generation technologies bring enormous advantages to nations, and the right policy choices must be made now, so we can reap the benefits tomorrow”. In short, this sector is part of the solution not part of the problem in the current economic environment. A new generation of networks and services will improve people’s quality of life, companies’ competitiveness and governments’ efficiency. The multiplier effect of the telecom sector makes it a perfect ally of governments working to reactivate the pace of development. If the European wireless industry is to continue to grow and meet the ever diverse and changing demands of its customers, it urgently needs a regulatory climate that stimulates infrastructure investment. The challenge going forward will be to create confidence in the markets so that large-scale investments in new high-speed networks take place in Europe, where the bloc is falling behind North America and Asia. Europe remains the global leader in telecoms – particularly mobile communications where the region has the highest penetration and coverage of any major market – but it significantly trails the USA in the development of Internet applications and software and Asia in terms of hardware and computer manufacturing. The question is – how long will Europe remain the leader? The ICT sector is a complex ecosystem that is changing rapidly and produces constant innovation, which makes it so important to modern economies. That said, there will be no new applications and services – nothing like a European Facebook or Google – if we do not achieve the best state-of-the-art infrastructure for communications in Europe. We have always stated the need for regulatory certainty and proclaimed the benefits of digital agendas in order to get the most from ICTs and maximise their economic and social impact. The telecoms industry as a whole, and wireless in particular, needs to build a stronger partnership with the European Institutions. We believe EU policymakers should foster an investment-friendly climate by creating the appropriate incentives for investments with a forward-looking regulatory framework. The deliberalisation process has been a great European success story and resulted in the creation of today’s competitive communication markets in Europe, in which consumer prices have been constantly decreasing in the last decade. Now is the time to initiate a new European telecoms policy, one that actively promotes investment and innovation. We need to free up the necessary spectrum for new mobile services as soon as possible. We need to see the end of micro-regulation and greater protection of intellectual property rights. Given the right regulatory environment, the ICT industry will be in a position to continue investing heavily in research and development to ensure Europe remains world leader in this sector. ICT development in Europe is far away from other regions in the World, like Japan, South Korea or US, where next generation networks represent 48 per cent, 44 per cent and 6 per cent of their broadband networks respectively. In Europe, this figure is just two per cent. Overall, progress need innovation and innovation has to come together with a more sophisticated network and a more open mind from the side of operators. Clearly, we are in a time of change in how public policy is developed and how it impacts the telecom sector and the broader business community. Much of the change we will witness in the coming years will be down to scale. Only the larger ICT players have the ability and financial resources to create the new networks of the future that are pivotal to the delivery of the growth of new applications, and integrated voice and data services. Although size is crucial, delivering value and new services to consumers is what differentiates companies in the marketplace. In today’s market consumers have choices and what’s great about this is that they are using their ability to choose not only between integrated suppliers, but also to opt for new service offerings from independent companies that provide fixed and mobile services on top of mobile networks. There is real competition both at the network level in Europe and at the retail level. The key differentiator in the telecoms industry in the future will be the ability of companies to build the necessary global scale and efficiencies and at the same time understand and customise their service offerings to meet the demands of their customers. The needs of users, whether they are companies or consumers, whenever and wherever they are – are paramount; service providers must offer transparent, and value adding, propositions and services driven by customer insight. Despite the difficult economic backdrop – it is a very exciting time for telecommunications. We are now entering an era where usage rates are starting to really explode. For the first time, we are truly moving from a verbal or voice world to a visual world of messaging, email, Internet browsing and downloading, social networking and entertainment all experienced ‘on the move’. This trend will be fostered by video and new applications, services, and business models in adjacent sectors such as virtualisation, advertising, e-health, e-finance, e-commerce, digital home and ICT services for enterprises and public administrations, including M2M. More powerful, smarter devices will become commonplace. Europeans are adopting new services delivered or enabled by telecommunications to improve the way they live and work. With these new services, we face new challenges to roll out new high-speed fibre and mobile networks to handle this new demand and to ensure the best possible customer experience. Extensive trials of the new LTE (4G) technology are well advanced with a number of the world’s leading vendors and service providers. These new networks will enable speeds of 50 to 500 times faster than today. Telecommunications and ICT can be the engine for economic recovery. This is far more relevant as we consider what Digital Europe should look like and how ICT can facilitate positive change, investment and inclusion. The wireless industry is ready to play its part by providing the tools for innovative investment in Infrastructure, transport, climate change, energy and the environment, health, education and skills. This will require more imaginative cross-sector policies to include ICT as a vital enabler for these sectors and for overall Digital Europe investment. Change is important. We all need to recognise that change is difficult, but change leads to a better future. The ICT industry must work in partnership with the European Institutions as we build a new and better policy framework that will recognise the importance of telecommunications to the future economic and social aspirations of Europeans. This desire to serve Europeans is, in the end, what we all share in common.