The European Commission has presented its Digital Agenda, part of the Europe 2020 strategy. The most important elements for the telecom sector are the target for increasing access to broadband services, including possible state aid for remote areas, and spectrum harmonisation.
On the surface, the plans present no surprises. ICT commissioner Neelies Kroes has already shown a willingness for a certain amount of government intervention. Furthermore countries like the Netherlands are already well on the way to meeting the goals. Broadband is maybe not 100 percent available, but it's not far off. The other target of universal access to at least 30Mbps by 2020, with at least half of households on 100Mbps, is also not especially ambitious. In the Netherlands, 50Mbps is already available to around 90 percent of the population (see our research brief 'Netherlands most homes passed with 50+Mbps').
The most startling element of the press statement was the emphasis on international roaming prices. By 2015 these should be so low that a mobile user doesn't even notice when he crosses a border - at least, not from the mobile prices. Combined with the ongoing push for mobile termination rates to reach fixed network levels by 2012, it's clear that the mobile sector needs to quickly mature. Artificially high tariffs and subsidising mobile with fixed networks soon will be things of the past.
At its Q1 results, KPN estimated that mobile termination rate cuts cost the company EUR 55 million in revenues and EUR 20 million in EBITDA. It's not surprising then that KPN didn't say a word about sales growth. Market expectations centre on a small revenue decline this year for KPN, to EUR 13.4 billion from EUR 13.5 billion in 2009, but the "market" is currently estimating small increases in 2011 and 2012 to EUR 13.45 billion (both years). Given the actions by national regulators and the EC, it's highly questionable whether this growth will materialise already in 2011.