Regulation in Telecommunications and Information Society

February 16th, 2015 – Article previously published in the blog “US and emerging markets” CincoDí

According Competitiveness Ranking of World Economic Forum (2013 and 2014), the development of telecommunications is one of the essential pillars for building the knowledge economy. Telecommunications are the substrate on which the economic, business and social building, which reached its height when enables the Information Technology SMEs -to reach them more productive and competitivas- and the general population, is constructed so that is more connected and informed.

It is so important what happens in the telecommunications sector, which accounts front pages of newspapers, is cause for attention from the public and political powers and becomes subject to regulation, sometimes excessive. In America there are big splash with the “net neutrality,” which seeks to promote President Obama, affecting himself to telecommunications operators. On Capitol Hill (which is based the US Congress) there are strong debates about whether or not there has to be “a two-speed Internet.” Interestingly, on Telecommunications operators Internet giants, who have to make the investment in networks that do have their counterparts in Telecos and wakes controversy between ATT, Verizon, and Google, Amazon, Apple AUPAN and Facebook shift. Internet companies benefit from the investments they have made the operators, and this is debated in North America.

So is the gap that exists between the concentration of a few telecom operators in the US, versus the enormous fragmentation seen in Europe. As in other -Rule gold markets of capitalism, since certain level of development is achieved in a sector, you tend to concentration (“The Making of Global Capitalism”, “The endless crises” or “The ascent of money “,” Why nations fails, “among other recent chronicles of Capitalism). We see it in UK: EE with BT, O2 with Hutchinson. Also in Spain: Vodafone ONO and Orange with Jazztel. Telefónica, for now, successfully keeps out of these processes. It’s one of the reasons why Fortune declared in 2014 as the most reputable telecommunications operator outside the United States, and Advice identified it as the most successful company in Spain under twenty parameters of business success.

In my day Comparative International Law was studied. Powerfully draws attention to the regulation of fiber optics in Spain -versus that of other similar countries is much more restrictive and harmful to the call dominant operator in France, Portugal and Poland. The question is not trivial. Telecommunications operators have made the deployment of its optical fiber cornerstone of their business strategies. Justice -in his classic concept of “giving each his own” or “ius suum cuique tribuendi” – has to keep in mind that you can not do comparative grievances, nor in relation to each other reciprocally-justice, nor in regulating the common good distributive-justice. All these principles blown up when the negative treatment received by Telefónica if it goes ahead the stricter regulation of Europe in terms of the optical fiber, which could force the Spanish operator to open its network to competitors, is seen with no counterpart from them. This would put Telefónica in a situation of disadvantage, derived from a -extraña and unprecedented situation of legal uncertainty.

Laws should not go against the economic progress of societies, on the contrary. And the market regulation should be consistent with this principle: to promote economic and social development.

Telefónica has invested 10,000 million euros in new generation networks between 2009 and 2013. No other player has done something similar in Spain. Nor is there any other sector of activity in which a private company has invested so much money in the development of a service or product. Especially when it is intended to benefit the general population.

In 2014, Telefónica reached five million homes with fiber optic network of new generation. Five million had been positively impacted in 2013 and fulfilled the plans of the digital operator, this 2015 would reach ten additional million households, covering 80% of the market. Telefónica is a private company that also is Spanish. Common sense and the principles of free enterprise and free market economics say it should be left Telefónica act as freely operating with Vodafone and Orange in Spain or in their home countries, Vodafone UK and Orange in France. Reciprocity is a key principle in justice and right.

From an economic standpoint, Spain wants to be a knowledge economy, with less weight of brick, and influence of information technology, as in the United States, which account for 70% of GDP. The Digital Agenda of the Government of Spain, in line with the European Digital Agenda, put in the center of the development of economy and society, the momentum of the optical fiber and a majority of the population has access to broadband. Spain, despite the crisis of 2009-2013, remains one of the most developed economies in the world. To keep growing, to strengthen the economic recovery, must continue to invest in information technology for businesses and households and individuals. The Digital Agenda makes clear the central role of the optical fiber, when achieving this goal.

Within the laws of the free market economy, should not be imposed on Telefónica regulations that go against the development of the information society. Telefónica being the main player in the market, what happens to it, has the label of systemic, in Spain, and in many of the countries in which it operates.

The media have echoed the news according to which Telefónica could slow or reduce the rate of investment, a consequence of excessive regulation, with consequent negative impacts on the economy and jobs. Spain not you can afford, now we see the light at the end of the economic crisis. The common good of society is above any consideration and this requires that Telefónica is not subject to restrictive regulations, but to the open market laws that benefit consumers.