Wheeler’s EU Charm tour hopes to keep telecom policy working for Silicon Valley

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Strand Consult has followed the telecommunications market globally for the last 20 years and studied how regulations impacts the industry’s ability and willingness to invest in telecommunications infrastructure.  We see that European Union fails to keep pace with the United States in network investment, deployment, and innovation. The US has 4 national 4G networks while the no player on the European market is allowed to create such scale and innovation.

Nothing suggests that the gap will close.  Clearly the EU approach has not worked. Instead the Commission and Parliament have pursued a set of “feel good, look good” policies such as roaming and net net neutrality which are meant to curry favor with consumers but in reality do nothing to realize the larger investment and innovation goals.  As such, Europeans should be skeptical of next week’s charm tour by Tom Wheeler, America’s telecom regulator who is town to to encourage Europeans to keep their flawed policies.

The idea of a politically appointed telecom regulator is not common in Europe, so Wheeler’s trip next week should be seen in context.  It is customary for the current FCC Chair to step down when the President of a new party takes office, but Wheeler has refused to announce his departure, meaning he could conceivably blockade new policies through the end of his official term in 2018.  This wild card should also temper the outlandish media predictions in the US media about a Trump administration. Looking at how wrong the mainstream American media was on the election, their predictions on the future FCC should be taken with a grain of salt. 

The media also got it wrong on Tom Wheeler. When he was appointed 3 years ago, the New York Times called him the “industry man”,  insinuating that the former cable telecom lobbyist would reward his earlier employers. Wheeler has indeed been the “industry” man, not for telecom, but for Silicon Valley.  His rulemakings on open internet, broadband privacy, cable set top boxes among others were billed as pro-consumer, but upon closer analysis reveal one thing above all—they unduly reward Silicon Valley.

Wheeler has initiated dozens of controversial decisions, 45 of which have ended in partisan 3-2 votes between the two parties, a record in the agency. Noted for its historical bipartisanship, Wheeler’s FCC took politicization of telecom regulation to a new high.

Wheeler’s tour follows the biggest upset for the Democrats in the last hundred years, losing not only the Presidency, but the Senate, House, and a majority of positions in state and local government.  He will have close – and unprecedented – dinner with  the Computer Communications Industry Association, a key American trade association representing some of the Democrats’ biggest donors, namely Google, Netflix, Amazon, Ebay, and Microsoft. 

CCIA is one of Brussels most powerful lobbies.  It and its members play a pivotal role in European telecom policy, both as a group and individually as they fund a number of the “civil society” organizations which are purported to speak for the consumer.  It’s not difficult to imagine that Wheeler will also ask for leniency on Google when he meets with DG Comp’s Vestager.

Strand Consult’s analysis shows that Google was represented by 7 of the 14 official stakeholders in the BEREC process to developed guidelines for net neutrality rules, including three of the four civil society organizations. A number of these groups succeeded to make a record number of submissions to BEREC, calling largely on their database of users in the United States. BEREC has consistently rejected Strand Consult’s request for transparency of information about its private stakeholder meetings vis-à-vis its net neutrality rulemaking. 

In 2003, the EU with the GSM standard, many leading telecom companies, and six phone manufacturers believed it would lead the world in the connected communications and innovations.  That didn’t happen because investment dried up when EU decided that they need to micromanage networks. The EU’s level of network investment accounted for one-third in 2003; today it is less than one-fifth and continues to fall. 

Meanwhile the Americans took a different approach. The period of 1996-2006 was largely deregulatory and expansionary in the US.  There were many mergers, high investment in networks, and the birth of many mobile innovations . The US has maintained a high level of investment, about one quarter of the world’s total, until softening in 2015 with Obama’s Open Internet order. 

The American election is a rejection of the last 8 years and reflects American’s desire to turn away from centrally-planned economic policies proposed by Obama and the Democrats.  Europeans should take note.

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