The process of European integration will affect telecom markets in the ten countries that will soon become part of the EU. The European Telecommunications Standards Institute (ETSI), responsible for standardising telecommunications in the EU, has developed programs to help the new members adopt its standardisation model. In an era when technologies are converging and when new communication technologies constantly appear, standardisation is necessary to create a strong, open, and well-organised telecom infrastructure that will serve as a foundation for innovation-led growth.
The year 2003 is the last before the first stage of European union enlargement process is completed. This shift in the political and economic environment will have many consequences for all EU players in the telecom arena. How will the process of European integration affect telecom markets in the accession countries and what are steps to be undertaken by ETSI to ensure that the accession countries adopt the EU standardisation model? Telecommunication markets of central and eastern European countries (CEE countries) are the most dynamic in the European continent. The mobile portion of these countries’ telecommunications markets has developed at a far greater pace than other sectors of the market. The shares of telecommunication revenues in these countries’ GDP are growing continuously. In some cases, telecommunication’s share of the GDP is more than 3%, as in Croatia, the Czech republic, Estonia, Hungary, Latvia, Poland and the Slovak republic . Eight countries from the CEE region and two Mediterranean islands-states (Cyprus and Malta) will become part of the European union in May 2004. A European union of 25 countries will have a large single market - with 75 million more consumers than the current EU - where persons, goods, services and capital will be able to circulate freely. The reforms and preparations necessary for EU membership have been driving, increasing, the overall economic growth of many of the accession candidate countries for the last dozen years. The success of enlargement program will depend upon the candidates. The accession countries have to be well prepared to participate effectively and enhance the unified European market. This shift in the political and economic environment will have many consequences for all existing and future EU players in the telecom arena as well. In an era when technologies are converging and when every day a new communication technology appears, standardisation is one of necessary tools for creating a strong, open, and well-organised telecom infrastructure that will serve as a foundation for innovation-led growth. Standardization is not just about producing norms for given technologies in given markets but more than that, it helps to create credibility, focus and critical mass in markets for new technologies . Within Europe, the European Telecommunications Standards Institute (ETSI) is responsible for standardisation in telecommunications, broadcasting and certain aspects of information technology. The European Union and the European Free Trade Association officially recognize ETSI as the standards setting body in these technology areas for the region. Based in Sophia Antipolis, in the south of France, ETSI currently unites 786 members from 56 countries inside and outside Europe. ETSI represents administrations, network operators, manufacturers, service providers, research bodies and users. It includes 46 full members, one associate member and three observers from 15 Central and Eastern European countries. Taking into account that regional boundaries around the world are becoming blurred, in this connection ETSI plays a major role in the development of a wide range of standards and other technical documentation as Europe’s contribution to global standardization. How will the process of European integration affect telecom markets in the accession countries and what are steps to be undertaken by ETSI to ensure that the accession countries adopt the EU standardization model? After accession, all of today’s candidate countries will find themselves, as EU members, in a new business environment with new rules and bigger market as well as with stronger and higher level of competition. As for regulatory issues, integration into EU requires that the accession countries transpose, adopt, the European acquis – including a package of new EU directives for telecommunications - by the 1st May 2004 reference date for their accession to the EU. ETSI has a duty to support EU and EFTA regulations and initiatives. More than a third of ETSI members from the CEE region are National Regulatory Authorities (NRAs) or National Standard Organisations (NSOs). For this reason, in 1998, ETSI introduced a new set of obligations requiring representatives from the CEE countries to disseminate knowledge about the EU standardisation system in the field of telecommunications and to help the candidate-countries transpose the EU acquis in the field of standardisation. Since that time, Poland, Bulgaria, Lithuania, and now Russia, have sent representatives of their countries to take part in ETSI activities. Some of the CEE countries - the Czech republic, the Slovak republic, Hungary, and Malta, for example - have already achieved significant success in their efforts to transpose ETSI standards. It’s obvious, that ETSI standards help to fulfil essential requirements of the EU directives and to integrate the products and services, as used in the accession countries, into the EU market. The EU reports that negotiations with the 10 candidate countries are well advanced and that the 10 will be ready for EU accession in 2004. So, a great deal of work has been done to harmonise the standards of the accession countries with those of the EU, but there is still a huge amount of work to be done. This is especially true for telecom market players such as manufacturers, network operators, service providers and users in the accession countries. Bearing in mind that 2003 is the year during which the first stage of EU enlargement process must be completed, and the weak participation of CEE telecom business representatives in its work, ETSI is working hard on its initiative to prepare the incoming countries for accession and to ensure, also, ETSI’s continuing relevance and leadership in the changing telecommunications environment of the era of European integration. Within the framework of this new initiative, a special meeting was held in March 2003, during the last ESTI General Assembly, with the accession country ETSI members, EU countries and business representatives. A number of issues were discussed concerning the steps to be taken by the participants to facilitate the adoption of the EU’s standardisation model by market players in the accession countries. It was agreed that the new initiative, called the Matchmaker Programme, will consist of a number of round table meetings - organised by ETSI and the NRA or NSO of each country - with members of the accession country’s telecom communities. At least one round table meeting is scheduled for each of the accession countries in the course of 2003 or the first half 2004. The main objective of the program is to bring practical information to the accession countries’ telecom communities about all the changes in the telecom standardisation environment and about how the changes will affect them when the enlargement process is completed. The program also aims to provide the new EU members with examples of the best business practices that have evolved in other countries where the standardised environment has been in effect for some time. . There are two main issues that will be discussed during the meetings. The first, issue is the adoption of the latest package of EU telecommunications directives . Accession countries will be able to speak, regarding this, with EU member states representatives who have experience with the implementation of this new legislative package. ETSI is also ready to provide information on how this new legislation affects its work. This should help accession country regulators and business representatives reach a common understanding of the market rules for the European Common Market. The second issue regards the economic benefits from standardisation - a very important question for telecom business representatives in the accession countries. For the time being, there are only 20 ETSI members representing telecom businesses in the 14 accession countries. Of those 20 members, 14 are from 8 CEE accession countries. Of course, by opening up markets and enabling competition, alone, standards do not necessarily increase the profitability of all companies. However, standards can help to develop markets for products and services based on the newest technologies and, consequently, it can be argued that standards can be an important marketing tool. Companies can reduce their R&D costs by participating in standards work. Investments in developing standards for mobile telecommunications services and applications of existing technologies such as 2.5G and 3G can be more fruitful at times than investments in developing new technologies. Small and medium enterprises (SMEs) in the accession countries will now be able to benefit from standardisation, as do many of their SME counterparts in Western Europe. Moreover standardisation is in the interests of the economy as a whole. Standardisation increases the volume of trade. By increasing imports as well as exports it makes an important contribution to macroeconomic growth and helps keep, or increase the telecommunications revenue portion of a country’s GDP at a sound level. Conclusion The participation in the European standardization process by more CEE telecom business representatives, especially from the accession countries, will definitely facilitate further development of the telecom markets in those countries. Standards are needed for business, but all receive benefits from standards: regulators, businesses and users. Please note that the views expressed herein are those of the author and do not necessarily reflect those of ETSI. 1. According to the data of World Markets Research Centre for the year 2000. 2. The Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, the Slovak Republic and Slovenia. 3. The economics of standardisation”, Peter Swann, Manchester Business School, December 2000. 4. The acquis communautaire is the body of common rights and obligations, which bind all the Member States together in the European Union. It is founded on the Treaties of the European Union (Treaty of Rome, 1957; Single European Act, 1986; and the Maastricht Treaty, 1992), in addition to the wide range of secondary legislation, which includes directives, regulations, recommendations, opinions and decisions issued by the Institutions of the EU. 5. http://www.europa.eu.int/comm/enlargement/docs/newsletter/latest_weekly.htm#A 6. The package consists of five proposed EP and Council directives under Article 95, one Commission directive to be adopted under Article 86 and one proposed Commission Decision on a regulatory framework for radio spectrum: Framework Directive; Access Directive; Interconnection Directive; Authorisation Directive; Universal service Directive; Data protection Directive and Radio Spectrum Decision. The new regulatory framework is intended to provide a coherent, reliable and flexible approach to the regulation of electronic communication networks and services in fast moving markets. The directives provide a lighter regulatory touch where markets have become more competitive yet ensure that a minimum of services are available to all users at an affordable price and that the basic rights of consumers continue to be protected.