By Duso, Motta, Peitz, Valletti: This column argues while the report rightly recognises that the availability, affordability, and quality of telecoms services are a key driver of European competitiveness, its recommendations on telecoms are misguided and dangerous.
The recently published Draghi report on European competitiveness offers radical proposals to reverse Europe’s competitive decline compared to China and the US.
On 10 September 2024 the Draghi Report on European Competitiveness was finally unveiled, highlighting Europe’s sluggish economic performance (Draghi 2024a, 2024b). The report correctly identifies major obstacles, such as underinvestment in innovative activities but also in physical infrastructure such as the energy grid. Draghi offers radical proposals to reverse Europe’s competitive decline compared to China and the US. Radical proposals may be needed, but those on telecoms are misguided and dangerous.
Telecoms and European competitiveness – some facts
The quality of telecoms services depends on the available telecoms infrastructure and these services are an important input for many business activities. Thus, the availability, affordability, and quality of telecoms services are a key driver of European competitiveness. This has been rightly recognised in the Draghi report. It is backed up by many studies assessing the benefits of high-speed broadband on a series of economic outcomes.
When it comes to investment in quality and coverage of telecoms networks, there is no compelling evidence that Europe lags behind. Additionally, retail prices for fixed and particularly for mobile telecoms services are lower in Europe than in other parts of the world, and very much lower than in the US. Robust telecom networks and affordable prices are crucial for Europe's competitiveness, because this is key infrastructure that is used by every single citizen and every business. This is why it is so essential to discuss this topic: if prices were to increase, or infrastructure to deteriorate or fall behind the technological frontier, the competitiveness gap with our global competitors would increase even further.
Perhaps more important than looking at comparing aggregate figures between the EU and other countries is the observation that there is a lot of variation among EU member states. For example, by 2022, the Netherlands, Romania, Portugal, and Spain each had more than 90% coverage of FTTP or DOCSIS 3.1 cable networks, compared with an EU-wide average only of 73%. Being more forward-looking and less obsessed with comparisons, it is a good time to ask how the policy towards digital infrastructure should develop.
Draghi’s proposals on telecoms and its shortcomings...
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