'Fascinating' Europe gets a boost from M&A rumours

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Europe's telecoms market has been getting a rough ride recently. Criticised from all angles for its slow pace of development on LTE networks and lack of regulatory uniformity, and compared unfavourably with markets in the United States and China, the industry must be collectively bristling as it strives to fight its way out of Europe's recession while also maintaining expensive LTE network rollouts, attempting to launch new and innovative services and adhering to new regulatory guidelines that actually cause their revenues to decline, including roaming caps and reductions in mobile termination rates.

Even Alcatel-Lucent CEO Michel Combes described Europe as being in a "vicious" circle of low operator investment and a lack of innovation.

In terms of the bloc's regulatory structure, one of the fiercest critics of the current patchwork of regulatory regimes is the EU's digital chief, Neelie Kroes, who has been busy this week delivering no fewer than three speeches on a topic close to her heart: to speed up the creation of a single market for telecoms in order to improve conditions for your average mobile consumer. The latest speech made in Dublin really puts the boot in:

"Quality is poor; there are few innovative services beyond basic phone calls; and prices are unfairly high," Kroes said. "If I phone the town next door, within our single market, that shouldn't count as a costly 'international' call. And the mobile in your pocket should not be the last remaining reminder of our internal borders: they should have disappeared long ago."

Comparing Europe's "tangle" of regulatory regimes to the U.S. and China, Kroes added that it's no wonder the European bloc has fallen behind. "There, operators serve hundreds of millions, under a single set of rules. No wonder they are racing ahead of us. No wonder Europeans suffer from poorer connections and slower broadband. No wonder European players are losing out in almost every corner of the ecosystem. No wonder all the major internet players come from outside Europe, from social networks to device makers."

Phew, sock it to 'em Neelie.

At the same time, she did not let the U.S. get off lightly: "The American market is not perfect. The EU telecoms market may be too fragmented, but it is certainly competitive. In the States, an effective duopoly makes life hard for new entrants, if not impossible. And rules like equity caps or unequal access to spectrum and networks are outdated, and have no place in a truly open market."

Given the above, it would be interesting to be a fly on the wall when Neelie Kroes meets AT&T CEO Randall Stephenson, a meeting the Financial Times said is expected to happen later this month. You can imagine the exchange:

Randall: "Hi Neelie, I'm thinking of buying a European mobile operator."

Neelie: "OK, but I want net neutrality--so no naughty blocking of over-the-top providers in case you were thinking of it--no roaming fees and to break down national borders. Oh, and Europe's still in the middle of recession--have you seen the unemployment figures in Spain recently?"

Randall: "OK, bye."

I jest of course. Operators may not like (read hate) cuts in roaming fees, for example, but there would be many elements of a single market that would be attractive to them.

The positive thing here is that the CEO of one of the world's largest operators, and a U.S. one to boot, is interested in Europe and indeed said he finds the market "fascinating" right now, the FT reports. As one of the world's leaders in the rollout of LTE, the FT also suggested that Stephenson is interesting in taking AT&T's lessons in LTE to Europe.

The fact he is over here now suggests that Europe is starting to convince the world it is getting serious about LTE. This, added to the general M&A rumours this week, gives a much-needed boost to Europe's operators.--Anne

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