What do EU tech leaders expect from a new EU competitiveness deal?

“Unleashing business potential” was the key message from Europe’s telecoms and technology sector to policymakers at the Tech Leadership Forum. The event, held on 12 December and organised by the Financial Times in partnership with Connect Europe, brought together prominent industry leaders and policymakers to discuss the competitiveness of a key sector for productivity and innovation.

In a context of significant change, with a new political cycle beginning in both the European Union and the United States, participants underlined the urgency of adapting policies to promote growth and innovation.

Building a prosperous digital future in Europe

The Forum was opened by Alessandro Gropelli, CEO of Connect Europe. In his speech, he stressed the importance of digital competitiveness, noting that there is no competitiveness without digital technology, and no security without resilient networks. However, he underlined that digital infrastructure requires large investments and innovation. In his view, promoting a favourable environment for investment and innovation is a factor that can make a difference to Europe’s competitiveness.

Henna Virkkunen, the new Executive Vice-President for Technology Sovereignty, Security and Democracy, then addressed the urgency of closing Europe’s “capability gap” and ensuring a prosperous digital future. Virkkunen underlined her commitment to creating the conditions necessary to strengthen the continent’s technological capacity, pointing to the Single Market as one of the most important assets. Among her priorities, she stressed the importance of simplifying regulation, fostering innovation by investing in connectivity, artificial intelligence and cloud computing, and ensuring digital sovereignty to strengthen the resilience of networks and a secure digital environment.

What do technology leaders expect from a new European competitiveness pact?

The FT Connect Europe Tech Leadership Forum focused  on exploring industry leaders’ perspectives on what could be expected from a new European competitiveness pact at the start of a new cycle, and, in particular, their views on the challenge of achieving greater scale in global markets.

In general, the panellists agreed on the need to simplify regulation, to review competition policy to promote a more flexible and scale-oriented approach to the sector, and to encourage collaboration between the public and private sectors. Similarly, another of the sector’s most recurring demands throughout the Forum was to ensure a level playing field in the digital ecosystem.

What challenges do European industry leaders see for technological competitiveness?

During the forum, José María Álvarez-Pallete, Chairman & CEO of Telefónica, pointed out that, despite having talent and digital innovation, Europe is losing ground in key sectors due to a regulatory environment that is not conducive to investment. He said Europe is regulating “a world of highways for horse-drawn carriages“, reflecting the disconnect between regulation and today’s technological realities. This outdated regulation, combined with high fragmentation, hinders innovation and competitiveness in the sector. In his view, competition policy should be a tool of European industrial policy to enable companies to scale up and innovate, and he called for urgent action to “unleash the potential of the sector”.

For her part, Christel Heydemann, CEO of the Orange Group, expressed concern about the lack of of investment attractiveness in Europe, pointing out that the complexity and slowness of the processes were leading investors seek opportunities in other markets.

Pekka Lundmark, President and CEO of Nokia, highlighted over-regulation as a structural challenge in the region and stressed the need to promote strong and financially viable telecoms operators, referring to their ability to drive and stimulate the rest of the technology ecosystem.

Finally, Ana Figueiredo, CEO of Altice Portugal, added that the lack of an adequate framework to encourage investment affects not only telecoms, but also key sectors such as automotive, where, for example, an autonomous car would not be feasible without resilient and quality connectivity.

Scale, the key challenge for the sector’s competitiveness

In the context of the specific discussion on the scale of European technology companies, TIM CEO Pietro Labriola bluntly stated that “inaction is not an option“. He stressed that the world of telecommunications has changed radically and that the regulatory framework needs to be reviewed. In his view, while competition has been encouraged, high investment costs and over-regulation remain barriers to operators’ profitability, a key factor in financing their infrastructure. This situation limits their scale.

Jenny Lindqvist, Senior Vice President and Head of Market Europe and Latin America at Ericsson, agrees, saying that without a return on investment, there is no investment, and no chance of achieving the scale to compete in the digital ecosystem. In her view, scale matters and consolidation “in-market” is needed.

Finally, Labriola reiterated the need to eliminate regulatory arbitrage between adjacent sub-sectors offering similar services. Ensuring a level playing field is, another key lever, he said.

The opportunity of the new European cycle for the telecoms sector

Ursula von der Leyen’s mandates to the new College of Commissioners, as reflected in the Mission Letters, highlight a clear focus on investment and competitiveness as a cross-cutting objective in all policy areas.

From the perspective of the telecoms sector, we expect such an approach to translate into policies that encourage greater investment in state-of-the-art and resilient digital infrastructure; effective regulatory simplification, an enabling environment for operators to grow and innovate, and a level playing field in the digital ecosystem. The Digital Networks Act and the review of the approach to competition policy are an opportunity for the EU to strengthen the competitiveness of its technology sectors.