Alcatel-Lucent CEO Michel Combes says Europe Must Stop its Cellular Race to the Bottom

Next Generation Communications Blog

Alcatel-Lucent CEO Michel Combes says Europe Must Stop its Cellular Race to the Bottom

Mae Kowalke, TMCnet Contributor

As leaders in Europe debate whether the EU is “back” during the World Economic Forum, the region is increasingly falling behind when it comes to telecommunications, according to Alcatel-Lucent CEO Michel Combes.

“There is a real danger,” noted Combes in a recent blog post on Europe’s digital divide (published in the Wall Street Journal, “that Europe is losing ground in the information era.”

That’s because there is an increasing gap between what the latest smartphones can deliver and what Europe’s telecommunications companies can support due to a price war that inhibits infrastructure upgrades.

“Europe is locked in a vicious circle of competition focused exclusively on price, one that forces operators to reduce their investments and destroys their innovation capacity,” noted Combes. “This type of competition is bad news for a digital Europe and its consumers.”

The digital agenda in Europe needs to be reset by the likes of the European Telecommunications Network Operators’ Association (ETNO) and others. Telecommunications investment in the order of between €110 and €170 billion will be needed by 2020 if the region is to keep pace with the rest of the world in terms of cellular infrastructure and innovation. Failure could cost Europe €750 billion in lost GDP growth, and as many as 5.5 million highly-skilled jobs for young qualified European graduates.

“That’s a high price to pay for accepting life in a slow-motion telecoms world,” he noted.

What Europe  must do, first and foremost, is move to an all-IP network infrastructure, supported by a virtualized infrastructures based on cloud technology.

Combes also suggested that Europe must invest more in applications and analytics and capabilities such as SDN and NFV.

“Today eight out of the top 10 global Internet platforms are American,” he wrote, and the two others are Chinese. “A new model of international work distribution seems to be taking shape in which the profitable operators are in the U.S. and the American Internet platforms are taking most of the residual value in Europe, while the application development centers are in India and the manufacturing is in China.”

Europe led the way when it came to 3G deployment, but now it is being left behind.

To fix the problem, operators need to end a competition model that is only based on reducing prices in the short term. Spectrum allocation also needs to be reviewed, and shared and efficient policies on net neutrality must be crafted to allow operators to differentiate themselves and revive investment.

“We also need to come back down to earth and stop thinking that the telecom sector can continue with 120 operators in Europe, subject to rules and procedures that change from one country to another,” Combes boldly wrote.

If Europe is not to fall too far behind, its digital agenda must tackle the recent decline in telecommunications.  Importantly, as Combes stated, it must do so with a sense of urgency and purpose.

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