American community leaders and policymakers can take a page from the development of the European Electronic Communications Code, a recent plan that set out to improve connectivity across the EU, to learn what not do when creating telecom policy. The code attempts to overhaul outdated and overcomplicated regulations on spectrum, next-generation networks, universal service, and broadband. While the European Commission had the right intention of improving the rollout of next generation networks so EU citizens can benefit from the digital economy, the code may exacerbate the very problems it was supposed to solve, killing the incentive for additional investment and the possibility for more network competition.
While the Commission presented worthwhile proposals for reform in the early stages of negotiation, the legislative process diluted the code’s substance so much so that the proposed reform can’t be achieved. The commission’s noble goal was to streamline the process to maximize the benefits for all Europeans and improve the incentives for investment, but that goal appears even more distant now. In the EU today, it is costly and inefficient to deploy a network with 28 different sets of telecommunication rules. Unsurprisingly, this is one of the reasons that there are no pan European mobile network operators.
If put into a US context, the code would mandate that each of the 50 states make their own spectrum and telecom policy. Spectrum, or the invisible airwaves that power mobile networks, is a finite resource that can take years to come to market but act as a source of significant revenue for governments. While states could maximize local revenue by bringing spectrum to market, this means that some citizens in states with less efficient policies could get left behind. Moreover, the fragmented state-by-state approach would make investment less attractive to network providers as there is less certainty in the broader marketplace.
In Europe, telecom operators face murky and conflicting regulations on market power, asymmetrical obligations, universal service, and state aid topics without clear distinctions and definitions of the interdependencies among them. As such, telecom operators will likely take a “wait-and-see” stance to see how their national regulator interprets the various rules rather than driving forward with regulatory certainty to begin building future-ready mobile networks.
The European missteps are clear, but let it be a warning to the US. The US would never have achieved its leadership in the latest generation of mobile networks, 4G, if it had taken a European approach. 5G, the next-generation mobile network with speeds 10 times faster than 4G, is a 21st century network attempting to emerge under 20th century rules in both contexts. But going forward on 5G, the US should pivot away from heavy-handed regulation like that of the EU and work to redouble its efforts to coordinate local, state and federal policy with the private sector to build a future that benefits everyone – and ensures 5G gets built as quickly as possible in the US.
To do this, the Federal Communications Commission (FCC) is working to make sure 5G’s infrastructure, including small shoebox-size cells that are frequently subjected to same standards of giant cell towers, is recognized at all levels as a fundamentally different type of wireless infrastructure and treated as such when it comes to rules and regulations. The FCC has recognized its role in making it easier to deploy the next generation of networks by streamlining regulatory and policy frameworks that could inhibit buildout.
Nevertheless, states and municipalities still need to make sure that they don’t add conflicting or confounding requirements that frustrate buildout and deny residents access to next-generation networks. Cities and states should work with the private sector to streamline policies related to network infrastructure to ensure their communities are open for business and 5G deployment. This is key, as the longer it takes to deploy networks in any given area means that providers will be slower to get to other areas.
The EU has set in motion an ill-advised policy that will likely make it more difficult and less timely for European citizens to gain access to 5G, but the US still has a chance. Let’s hope that more than the FCC recognizes the potential to foster a better future for its residents, not strangle an innovative path to the future.
Georg Serentschy of Serentschy Advisory Services offers strategic guidance for leaders in the Internet, Telecom, Media and Technology sectors. He served as the Chief Executive Officer of the Telecom Regulatory Authority of Austria from 2002-2013 and as the Chairman of BEREC (Body of European Regulators for Electronic Communications) in 2012.