Continental Grift

[Commentary] In June, when the Financial Times included a sponsored magazine insert created by Ernst & Young (“Helping Businesses Raise, Invest, Preserve and Optimize Capital”), there were some unintended laughs. The cover model of the slick publication was the Deutsche Telekom CFO Thomas Dannenfeldt, staring straight into the photographer’s lens. Dannenfeldt, the cover copy proclaimed, has ideas about “transforming Deutsche Telekom to create a new legacy.” And here is the joke: the giant incumbent European telecommunications company Dannenfeldt works for brazenly proclaims that benefits would accrue if it were allowed to be more like Comcast in the US: huge, unregulated, and able to charge luxury prices for services that, to consumers, feel more like a utility. And so, pointing to the US high-speed Internet access market as a success, it is urging European regulators to drop the requirement that it share its copper access lines with competitors  --  a key element of European competition policy that has driven consumer prices down. Proponents argue that the American model will strengthen European network operators, drive infrastructure investment, and improve Europe’s competitive position in the global digital economy across market segments. But if what European policy makers want is to foster economic growth and reduce inequality, the American model isn’t a great one.

The better answer for Europe? Set an extinction date for the obsolete copper wires now sold by incumbents, provide loan guarantees for companies willing to install wholesale passive fiber lines, ensure that those wholesale facilities are made available to competing providers at reasonable rates, and set the global standard for making basic fiber-optic-plus-Wi-Fi services available to all at a reasonable price.

[Susan Crawford is co-director of the Berkman Center for Internet & Society at Harvard University]