Neven Dilkov is Founder and CEO of Neterra EOOD.
In my experience as the chairman of the European Competitive Telecommunications Association board, I can say with full confidence that the one thing that determines the health of a telecommunications market, or any market for that matter, is competition. Once you have competition, everything falls into place.
What Is A Market?
In economics, a market is a place where goods and services are exchanged. Competition ensures that a market functions as it should, providing customers with services and products that are good quality at a fair price. In a capitalistic economy, the market serves consumers and businesses. Markets can also be designed to serve a government or monarchy.
Regulations And Competition In A Healthy Market
While I believe that competition is key to a healthy market, there are occasions in which strict regulations can keep the market regulated in absence of competition. For example, UAE is ranked as the No. 1 country in the world for penetration of home fiber internet, 99.3% of the nationa’s residents receiving fiber internet in their homes. UAE is a kingdom, it does not operate under a market economy like the West. But regulations ensure that fiber internet is widely available at a fair price.
Most western countries have chosen to rely on a market economy. History has proven that a free and competitive market will usually keep prices fair and as low as possible. My country, Bulgaria, was a state-controlled economy in the Soviet Bloc 30 years ago, and like most state-controlled markets, it failed. Today it is a market economy, and I can say from personal experience that a competitive market where supply and demand determine price is better for consumers and businesses.
In the EU, we have a free market, but it is not uncontrolled. The EU lets the market develop freely, but if they see it’s becoming distorted, regulators will intervene with European Market Directives that restore balance. Free market forces often develop in the direction of consolidation, like a small number of big players buying smaller companies to erase competition. That’s where regulations are important.
One of the most successful pieces of European market legislation was the GDPR, the General Data Protection Regulation, which defines personal data and states that the individual owns it. The GDPR made it so that any company that wants to use an individual’s personal data must: obtain permission from the individual, delete the data if the person asks and ask before sharing that information with another entity. By defining these basic concepts, the GDPR changed the way networks all over the world were cashing in on people’s personal data. European telecom customers can now switch phone operators without losing their contacts, photos and texts, and phone providers can no longer hold customers’ personal data hostage as a way to keep them locked into contracts.
Report Finds European Telecom Market Not Competitive Enough
In 2024, the European Commission asked former European Central Bank President Mario Draghi to prepare a report about European market competitiveness. In it, Draghi found that the European telecommunications market is not competitive enough because, in the global market, EU telecom operators are not big enough to compete. The Commission’s suggestion was to roll back regulations to allow telecom companies to grow bigger and increase their market share.
I oppose this strongly. If we allow companies to grow without competition, they will charge as much as possible. Even the most socially conscious companies will do this if allowed to run without competition. What the market needs instead of less regulation is a push toward greater competition.
Four Characteristics Of A More Competitive Telecom Market
Creating a more competitive telecom market in Europe will require four characteristics that each country must work toward.
- Fair regulatory frameworks: Pro-competition rules should be implemented to ensure a level playing field for all market participants, including regulations to prevent large telecom operators from engaging in anti-competitive practices, strict oversight of mergers to prevent reduction of market diversity, fair and equal access to infrastructure for large and small players, equitable spectrum allocation and streamlined licensing.
- Low barriers for new entrants: The substantial cost of deploying new telecom networks can deter new companies from entering the market. Regulators should require established operators to share their networks with new entrants at reasonable prices to maintain competition. Regulators should also keep spectrum licensing costs low, which may be achieved by reserving part of the spectrum for new entrants or by requiring established players to share with new operators.
- Transparency: Transparency is needed throughout the industry to maintain a level playing field and discourage unfair practices. Some areas where transparency is needed include spectrum usage, pricing and availability (including which parts of the telecom infrastructure are controlled by incumbent operators); merger approvals, market intervention and funding allocations; and pricing and consumer contracts.
- Monitoring: Regulators should be monitoring the market and providing regulations as needed to help new entrants enter the market as well as preventing big players from buying up their competition and creating monopolies.
Healthy Markets Embolden Entrepreneurs
When navigating new markets, entrepreneurs have to choose: do we go forward or do we go back? They hang back when they aren’t sure things are going in the right direction, maybe because of lack of regulation or big players that have been allowed to squeeze out competition. But when entrepreneurs see an opportunity in a healthy, competitive market, they go for it, which increases competition and variety within a market. My advice for the EU is to work toward a more competitive telecommunications market by supporting new entrants, monitoring the market and passing regulations when necessary to protect the healthy competition.
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