DIU, Alm.del - 2023-24 - Bilag 150: Orientering om notat om regeringens høringssvar på Kommissionens høring om fremtiden for telesketoren fra Klima-, Energi- og Forsyningsministeren

Udvalget for Digitalisering og It 2023-24
DIU Alm.del Bilag 150
Offentligt

Danish response to the public consultation on the European Commission’s

White Paper “How to master Europe’s digital infrastructure needs?”

Center

Center for international klima

og energi

Kontor

EU-kontoret

Dato

28-06-2024

J nr.

2024-2367

Denmark welcomes the opportunity to comment on the European Commission’s

White Paper “How to master Europe’s digital infrastructure needs?” and appreciate

the Commission’s aim to identify potential challenges and possible scenarios for pub-

lic policy measures to further Europe’s digital transformation.

Summary of remarks

•

It is important to be precise in identifying challenges, and where a chal-

lenge has been identified, to carefully assess whether there is justifica-

tion for new regulatory measures. Proposals for new regulation should

be based on thorough, evidence-based impact assessments.

Europe should continue its technology neutral and market-based ap-

proach to regulation and interventions in the field of telecommunications.

Denmark is concerned that cross-border consolidation can reduce com-

petition in well-functioning markets, and stresses the importance of

maintaining healthy competition among operators in the EU.

/ PEHPE

•

The electronic communications sector is characterised by rapid change and innova-

tion and in this light, Denmark agrees that it is important to master Europe’s digital

infrastructure needs, including ensuring secure and resilient infrastructures. In this

regard, it is relevant to analyse whether the current regulatory framework is fit to

handle the transition in order to address technological and market developments, or

if there is a need for new regulatory measures to adapt to and enable Europe’s digital

transformation. Hence, Denmark welcomes the effort of the Commission.

The Commission has identified a number of challenges in pertinent areas. However,

not all of these challenges are clearly described and it is not clear if all identified

challenges exist in the Union as a whole as described in the White Paper. While there

is no doubt that challenges exist in the telecommunications area, it is important to be

precise in identifying them, and where a challenge has been identified, to carefully

assess whether there is justification for new regulatory measures.

In addition, the challenges identified by the Commission do not seem to be supported

by sufficient evidence in all instances. Hence, the White Paper seems to lack a clear

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vision in regards to which direction the sector should go, although thoughts of policy

directions facilitating the single market and building scale for market players are

prominent. Hence, these thoughts on the single market and building scale will be

addressed.

Denmark agrees that there is a need for structural investments to reach the 2030

connectivity targets. Private investments already cover most of the necessary invest-

ments needed to reach the target, which is important to bear in mind when discussing

the overall investments needed. Otherwise, there is a risk of overestimating the need

for state intervention, which could lead to measures that could harm the dynamics in

well-functioning markets.

Denmark supports ensuring the best possible conditions to foster the deployment

and would like to stress the importance of an evidence-based approach before intro-

ducing any new measures. In general, Denmark is of the opinion that:

•

Europe needs to maintain a strong focus on transparent and predictable frame-

work conditions that will ensure a strong and well-functioning market for elec-

tronic communications with a high level of private investments.

Europe should continue its technology neutral approach to regulation and inter-

ventions in the field of telecommunications.

Europe should ensure the best possible conditions to foster the deployment of

telecom infrastructure. However, framework conditions cannot replace a busi-

ness case. Investment in deployment of telecommunications infrastructure will

only happen if there is a broad demand for services that require such infrastruc-

ture.

Before introducing new legal measures in a quite mature telecom market it must

be carefully evaluated if there is a need for such measures. When addressing

identified problems, this should be done to ensure innovation, investment and

competition to the benefit of end users.

•

A Digital Single Market

Denmark recognizes that some stakeholders believe that scale can make investment

in telecommunications more attractive, but encouraging scale and consolidation im-

plies some trade-offs. Hence, consolidation is not the only way forward. Industrial

policy measures that favour large scale cross-border provision of electronic commu-

nications networks may work to the detriment of competition, innovation and growth,

and ultimately consumers and businesses. Therefore, Denmark is concerned that

cross-border consolidation can reduce competition in well-functioning markets. Den-

mark believes that it is crucial to have players of different sizes, since a competitive

market benefits end users, both when it comes to the range of services offered and

the prices thereof.

Smaller players may base their business case on deployment in areas that are not

attractive to larger players. In the absence of small players, some areas might have

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to wait longer for deployment. Hence, cross-border consolidation will not necessarily

contribute to reach the 2030-targets. In Denmark, small broadband operators have

contributed significantly to the deployment of very high capacity networks and end

user benefits, both by deploying broadband in areas that larger operators may not

have served as soon or maybe never; and by stirring up focus from larger players to

act on deployment of fibre and ensuring price competition. When an operator has a

large scale, the operator might likely be able to afford to not invest in marginal busi-

ness cases. These experiences give rise to worries with regard to further consolida-

tion and increase in scale.

While measures further facilitating cross-border consolidation may provide players

with a better opportunity to reach economies of scale, it may also lead to a European

market with few large pan-European players, which would be to the detriment of

competition and have negative impact on end users. Therefore, if a need for some

measures enabling more consolidation than today is identified, it must be ensured

that such increased consolidation is not excessive and will maintain competition at a

high level and focus on benefits for end users. Whenever an operator increases in

scale, it becomes both more crucial and more challenging to ensure that the operator

continues to face healthy competition.

Furthermore, the lack of deployment of advanced infrastructures and services like

5G stand alone may not be a result of the current framework conditions, but instead

a lack of broad demand for such technologies and services. Denmark supports en-

suring the best possible conditions to foster deployment. However, framework con-

ditions cannot replace a business case. Hence, it should be analysed whether there

is an actual demand for services and if so, it should be analysed whether these ser-

vices can only be delivered by cross-border or even pan-European operators.

The vision of facilitation of cross-border provision of networks and services and the

potential of a market with a few large pan-European players contradict other parts of

the White Paper where the Commission states that protection of end users’, including

consumers, interests will continue to carry important weight among the objectives for

any measures taken in the future to address the identified challenges, and that the

stable bedrock of any future regulation should be the “European Declaration on Dig-

ital Rights and Principles for the Digital Decade” of 15 December 2022, according to

which people are at the centre of the digital transformation in the EU and all busi-

nesses, including SMEs, should benefit from it.

The White Paper seems to lack explicit thoughts of in-market consolidation, and

therefore Denmark encourages the Commission to analyse whether some of the

identified challenges could be resolved by in-market consolidation

, or other

Enrico Letta’s report states that consideration should be given to the necessity of some

level of consolidation within national markets.

https://www.consilium.europa.eu/me-

dia/ny3j24sm/much-more-than-a-market-report-by-enrico-letta.pdf,

pp. 55-56.

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measures. In this regard, it could be relevant to reflect upon if there are barriers in

general regulation outside the specific regulation of the telecoms sector.

Scope of application

In general, Denmark supports a level playing field for services that are similar. Den-

mark acknowledges that the electronic communications sector features change and

innovation and that it has an impact on the internet ecosystem, including the emer-

gence of new businesses. However, it seems unclear if there is a sufficient conver-

gence between electronic communications networks and cloud that justifies a change

of the scope of application of the electronic communications regulatory framework.

Therefore, an analysis should be carried out to determine whether a change of scope

is necessary. In this regard, it should also be analysed further, whether a change in

the scope of application would contribute to achieve the intended aim.

In relation to IP-interconnection, the White Paper indicates that markets for transit

and peering and the contractual relationships between markets players generally

function well. Therefore, before initiating any policy measures to ensure a swift res-

olution of disputes in relation to transit and peering agreements, it must be demon-

strated that there is a problem to be solved. If any measure is proposed, it should be

subject to careful assessment, as the market is driven by functioning market dynam-

ics and by cooperative behaviour of market players. In this regard, the analysis could

look further into whether this applies to smaller market players as well.

Authorisation

The Commission argues that an application of a single set of rules based on a ‘coun-

try of origin’ principle for core networks and core network services would enable EU

core network operators to leverage the full potential of the internal market to reach

critical size, take advantage of scale economies, and reduce capital expenditure and

operating costs, thus solidifying their financial position, attracting more private invest-

ments and ultimately contributing to EU competitiveness. It is not explicitly stated

how the system would work in practice, but Denmark is concerned that an application

of a single set of rules based on a ‘country of origin’ principle could pose some chal-

lenges regarding Member States’ competencies. This approach could also lead to a

race to the bottom situation where operators choose to establish their business in the

country with the most favourable conditions and thus the lowest level of rights for end

users. Such a system may also put end users in a situation where they have to un-

derstand and navigate the legislation of another country.

Such rules would further favour the development of a few pan-European operators,

which in Denmark's opinion could be detrimental to competition with derivate effects.

Addressing barriers to core network centralisation

In relation to barriers, Denmark recognizes that national rules beyond sector specific

electronic communications legislation may impose obligations, which can be seen as

barriers to a full integration of the Single Market. However, Denmark does not agree

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that it prevents an operator from exploiting economies of scale and does not find that

a one-stop-shop measure in regards to a set of conditions and requirements to be

consistently applied throughout the network is the right solution. In addition, Denmark

finds - in particular in the light of the current situation - that it is essential to keep

national competence in regards to security aspects, e.g. security vetting for relevant

staff.

Radio spectrum

The Commission states that Europe is lagging behind with regard to roll-out and up-

take of 5G networks, principally 5G stand alone, due to a lack of coordination in

spectrum assignment between Member States which might also hamper a timely 6G

deployment. Differences in award timings and conditions are also identified as

causes for the delay leading to sub-optimal network quality and performance to the

detriment of consumers and businesses.

It is Denmark's assessment that there has been no uniform delay in the EU of the

award of 5G pioneer spectrum bands in relation to the deadlines provided in the

legislation. According to available information, a majority of Member States have

awarded spectrum of the core 5G pioneer bands (700 MHz and 3.5 GHz) within the

set time frames. The current regulatory framework includes sufficient remedies for

the Commission to enforce compliance with these provisions. Demand side charac-

teristics are at least equally important to consider in relation to 5G take up as is the

timing of awards and national award procedures and licence conditions. The fact that

5G until now has not offered notable advantages to end users compared with 4G/LTE

has been a decisive factor with regard to operators' unwillingness to make the sub-

stantial investments required for a full scale 5G stand alone network deployment. As

to overpayments and artificial scarcity in past spectrum auctions Denmark is of the

opinion that these claims lack sufficient evidence. Prices in spectrum auctions are

the result of supply, including attached licence conditions, and demand in combina-

tion with competitive pressure and should reflect the market value of the spectrum in

question. Spectrum is awarded on a service and technology neutral basis leaving the

choice of future provision of services to the operators' commercial assessments.

With regard to the Commission's envisaged measures to prevent a similar future sit-

uation it is Denmark's position that EU level planning of sufficient spectrum for future

use cases is sensible to a certain extent. However, caution must be applied in order

not to end up in a situation where demand for spectrum and services is overestimated

leading to award of spectrum which is going to be underutilised for several years.

Strengthening EU level coordination of auction timing is provided for already in the

regulatory framework (the EECC). An example where market demand for spectrum

set to be made available to the market by a specified date is the 26 GHz band where

market demand has been virtually absent in Denmark as in many other Member

States. Setting common deadlines for the availability of specific spectrum bands

should be based on practical experience or evidence and take into consideration that

market circumstances in Member States may vary significantly.

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As to the Commission's consideration of a more uniform spectrum authorisation land-

scape Denmark finds that a prerequisite for efficient awards is well-designed and

timely awards with award objectives which allow for taking also national circum-

stances and specificities into consideration. This includes the market situation, com-

petition and specific interests to be considered, for instance through coverage and

usage requirements for licence holders. Market conditions in Member States are not

identical. Due to different circumstances different approaches may be needed to

achieve the common objectives enshrined in the EU regulatory framework.

European cooperation in the spectrum area is functioning very well, including the

work carried out in the CEPT. The cooperation between the Union and the CEPT

established in the regulatory framework has since 2002 shown its high value for the

EU through the elaborate technical work by the CEPT on the basis of mandates given

by the Commission in cooperation with EU Member States. This has provided a solid

technical foundation for spectrum harmonisation decisions taken exclusively at EU

level. In Denmark's view, it is a strength that the CEPT also includes non-EU coun-

tries. This paves the way for harmonisation across the whole of Europe, fostering an

even bigger market for the telecoms sector.

Copper switch-off

Denmark welcomes the Commission’s focus on environmental sustainability in the

digital transformation. However, the need for the establishment of a mandatory

roadmap for copper switch-off, including the determination of a particular date for the

switch-off is not found relevant. Denmark finds that operators should have the choice

to decide when the switch off takes place, also considering the consequences for

end users.

Access policy in a full fibre environment

With regard to access regulation, Denmark agrees with the Commission that it could

be the right time to analyse whether the future regulation should still be based on ex-

ante regulation or replaced by ex-post control with the possible continuation of ex-

ante regulation where necessary (the three criteria test) and further to consider the

introduction of EU-wide access remedies. However, the decision should be based

on a thorough analysis.

Universal service and affordability of digital infrastructure

Although, in the current economic situation, rising inflation may make adequate

broadband less affordable to consumers with low income or special social needs,

any initiatives to curb this development must carefully consider the potential ramifi-

cations of the specific initiative and allow for the different ways of overcoming such

challenges in the Member States. Denmark does not subsidise purchases of selected

products and services such as broadband access, but prefers to conduct social policy

through general transfers of income.

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Competition has proven effective in ensuring reasonable prices and, thus, affordabil-

ity. Maintaining healthy competition in the broadband and mobile markets is therefore

also important from a social perspective.

Concluding remarks

Denmark appreciates the Commission’s aim to identify potential challenges and pos-

sible scenarios for public policy measures to further Europe’s digital transformation.

However, Denmark has concerns about the underlying vision, including policy initia-

tives towards cross-border consolidation. Denmark is concerned that the White Pa-

per does not sufficiently address how to balance any potential measures aimed at

consolidation with maintaining high levels of healthy competition and safeguarding

the interests of end users. Denmark encourages the Commission to look further into

alternative, market-based measures, and in general stresses the importance of an

evidence-based approach before introducing any new measures.

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