Cause and Effect in European Politics and Law

The October EU Summit: A Digital Revolution or Business As Usual?

Adelina Marini, October 24, 2013

Can you imagine being able to travel across EU and not be forced in each country you go to look for an Internet café or a wi-fi hotspot or a shop where you can buy a data SIM card? Or if you have to travel by car throughout Europe not to be absent for hours from your e-mailbox, the social networks or the conference calls online with your business partners or colleagues? Or to be able to download a navigation map on the place where you have just landed without additional huge costs? All this is possible if only the leaders of the EU member states, who gather in Brussels on Thursday and Friday for their regular October summit, approve the European Commission proposal.

The topic for this European Council will not simply be different, but revolutionary. And, no, it will not be the banking union, although it, too, is on the agenda of the leaders. It is about a digital revolution, largely exceeding the scales of the recent reductions of roaming fees in EU. European Commission chief Jose Manuel Barroso has managed to pass the proposal of his deputy Neelie Kroes for a complete opening of the common market for telecommunication and electronic services. A proposal that was presented on the next day after Mr Barroso made his annual state of the union address in Strasbourg in the beginning of September.

Barroso wrote a broad letter to the heads of state and government of the 28 member states in which he outlined his motives why was it important that they include in their programme Neelie Kroes's proposal together with some issues from the digital agenda that were left behind. According to him, the digital services and telecommunications are the main drivers of growth and productivity in all sectors of the economies. "However, we are not yet getting the most out of the potential for our single market in telecommunications and online services and in these industries the EU is losing ground to our international competitors", Barroso wrote. And the author of the proposal, Ms Kroes, warned that unless the leaders paid sufficient attention to it Europe could lose the global competition for economic growth.

In support of her words she quoted data, according to which "the app economy" for smart phones and tablets is expected to grow from 11 billion euros today to 15 billion in 2016. The mobile apps support 794,000 jobs only in Europe, as half of them are high qualified and high paid jobs for developers. But what is more important is that Japan, South Korea and USA, whose combined population equals that of the EU, have 8 times more fixed fibre broadband and almost 15 times more 4G. The gap is only growing and Europe will lose unless it changed, warns Neelie Kroes almost every week, and this week even twice on the eve of the European Council.

What is the revolution all about?

The European Commission proposal goes way beyond the simple removing of roaming fees which for itself would unleash a huge potential. Also envisaged is a single European license for service providers in all the 28 member states and not 28 separate licenses. As of July 1st 2014 to be removed the fees for incoming calls in the EU and to provide the option telecoms to offer plans for calls that will be applicable in the entire Union, the so called service Roam Like At Home. The price should not be different than that on the domestic market. Consumers should also be allowed to detach and choose a provider of roaming that offers cheaper fees. This in itself is revolutionary as an idea.

A ban is also envisaged on additional fees if you ring from a land line in Sofia to a land line in Berlin, for instance. The same is valid for calls from landlines to mobile phones. The price of incoming calls within the EU should not be higher than 0.19 euros per minute with VAT included, is another part of Neelie Kroes's proposal. The aim is the companies to stick to the objectively justified costs and to eliminate the possibility of overrated profits. The ambition of the proposal does not end here. Also banned will be blocking and control over the Internet speed.

European Commission proposes three options for these ideas to pass because Brussels is not delusional that its ideas could pass after severe resistance as by the sector so on behalf of governments. The first option envisages regulatory coordination through changes in the regulatory framework on electronic communication services. The second, which is preferable for the Commission, deepens the European integration in that area, but also centralises governance. Enhanced coordination at EU level is envisaged with the introduction of a single issuer of licenses for the electronic communication services providers. That body will have access to spectrum lines and bitstreams. The second option is based entirely on the existing legislation. The third option is similar to the second, but envisages even greater centralisation, namely through the establishment of a common European regulator that will bear responsibility for the implementation and enforcement of the common European services, including in the area of spectrum.

During debates on the matter in the Transport, Telecommunications and Energy Council in June, many of the delegations supported in general the proposal but voiced concerns with the attempts for more centralisation in that area. The reactions that are already coming and are yet to become more vociferous by the telecoms should not be ignored, too, because according to European Commission estimates, they can sustain losses of roaming revenues of approximately 1.6 billion euros, as well as losses of revenues of about 700 million euros from international calls. These, however, are the worst case scenarios, the Commission believes, and in reality the impact would be much smaller. The telecoms will sustain losses with the enforcement of zero roaming as of 2016 anyhow. Instead, however, competition will increase on the internal market which will finally become common.

In view of the completion of the digital single market the Commission made this week another bold step forward - adopted a decision for the creation of a High Level Expert Group which will discuss ways for taxation of the digital economy. The task of the group will be to identify the main problems of digital taxation and to present possible solutions. On their basis the Commission will develop relevant initiatives.

A matter of survival of the EU?

If option two were chosen it will mark the beginning of a genuine revolution in the EU not only in terms of digital economy, but also in terms of European integration at large. Against the backdrop of the growing with a lightning speed euroscepticism, stemming largely from the fact that the benefits for European citizens of the EU are growingly unreal, elitist and distant, and also against the backdrop of the economic crisis and the feeling that we feel foreigners travelling from one member state to another, that proposal could prove the stick the EU can grab to survive as a project. In that regard, Neelie Kroes is targeting very precisely saying that "this is no longer about little fights on individual issues. The point is the big picture, and the fact that we are all connected". Will we really be connected depends on how will the discussion on the issue unfold at the highest level on Thursday.

It is scheduled to be the first point on the agenda of the summit, which begins on the evening of October 24th. President Rompuy hopes the leaders will be able to approve the prepared by the Presidency conclusions by the dinner, which will be dedicated to another very important and painful issue - the social dimension of the Economic and Monetary Union (EMU) or the euro area. The Commission presented its view about how will the social dimension develop of the Union which found itself with record high unemployment rates, especially among the young people, in the most heavily affected by the crisis countries. This was a major motor of the anti-European and nationalistic movements in many of the member states, gaining more and more speed and representing a huge threat for the European elections in May next year. After dinner, the EU leaders will be served the dessert - a debate on the future of the banking union.

If the latter two topics replace the digital economy this will mean the EU will give up a revolution of its being. If I, as a citizen, have to buy every time a SIM card when travelling to a EU member state, experience hardships when moving to work or live in another member state because of my second tier citizenship or because in my homeland I do not feel the benefits of the EU funds because it is corrupt, what can make me feel a European citizen? So, the stakes are much bigger than the profits of the telecoms and let's hope the EU leaders are aware of that. After all, isn't this the whole point of the European project - to feel at home wherever you are in the 28?

At this stage, the circulating in Brussels draft conclusions give hope, but they also are a reason for concern. On the one hand, the draft calls on the legislator to "explore" the situation in view of adopting the European Commission proposal. On the other hand, though, it is pointed out that the provision of digital services and content across the EU requires the creation of a copy right regime that is appropriate for the 21st century. That is why the Commission is expected to come up with a concrete proposal in the spring. The European Council calls on the Council and the Commission to move the digital agenda forward and commits to come back to the matter "in the course of 2014", without binding deadlines. This means that the European Commission ambition the roaming to disappear as of July next year will be cooled down. Well, these are only draft conclusions. The situation can get worse by the evening.