Intermodal Competition and Investment for Europe?

Quite often, when an executive says something “cannot be done,” what they really are saying is that “my firm, with its present business model and cost structure, technology base and intellectual property assets, cannot do it.”

Some other entity, with a different set of assets, business model and assets, might well be able to figure out how to do something others consider “impossible.”

Looking at communications policy in the European Commission region Strand Consult owner John Strand notes there is a fundamental institutional conflict between the  the Directorate General for Competition (DG Comp) and the Directorate General for Communications Networks, Content & Technology (DG Connect), in terms of fundamental approaches to promoting a sustainable long term competitive environment that also provides incentives for robust investment.

Strand has argued before that current policy is not working, in that regard.

He further argues that while one agency attempts to foster investments, the other deters them.

DG Connect, he argues, “in many ways has a realistic view of the challenges in the EU and the solutions.”

In practice, that means DG Connect is in favor of supplier consolidation, while DG Comp is not in favor of consolidation.

Perhaps there ultimately will be resolution by another means. Without suggesting that all markets globally are the same, since they increasingly are divergent, it is possible the EC could see more investment and more competition irrespective of the efforts of the two regulatory bodies, though Strand believes a resolution of the conflicting policies would be better.

We can disagree about the proper balance of incentives and controls to achieve the goals of robust investment and equally robust competition.

But as a simple historical matter, the cable TV industry, operating outside the common carrier framework, created the basis for robust facilities-based competition, “outside” the purview of the traditional “telecom” ecosystem.

That might yet be a direction within some parts of the EC as well, as Liberty Global pursues a greater role in communications, on its own facilities, not purchased wholesale from a former incumbent telco.

The potential, in other words, is for greater investment--and competition--provided across industry boundaries, instead of within them.

That sometimes has been called an intermodal approach, rather than an intramodal approach. Liberty Media is on the cusp of  bringing intermodal competition to the EC.
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