2. The Telecoms Industry

The term ‘Telecoms industry’ encompasses, in 2015, a broad scope of economic activities. More specifically in terms of global 2015 figures, business forecasts were as follows (source: Digiworld Yearbook 2015): ²

• ∙ network platforms: €314 billion – for public telecom (52%), corporate telecom (15%) and information technology (33%);

• ∙ telecom services: €1164 billion – via fixed telephony (15%), mobile services (61%) and data & internet (24%);

• ∙ internet services: €327 million – mainly through Cloud (45%), paid mobile applications (19%) (both excluding mobile applications) and IP communication (VoIP, IP messaging, including games) (15%).

The balance between these components – network platforms 17.4% / telecom services 64.5% / internet services 18.1% – will continue to evolve because the telecom industry is on the verge of new changes, and two of them, in particular, are worth mentioning:

• ∙ the strong base of telecoms operators’ revenues, rooted in their geographical networks strategies, will have to deal with the rising economic power of OTT – Over the Top – providers with their global communication services present in all the internet market segments;

• ∙ the widespread adoption of digital connectivity through the Internet of Things (IoT), i.e. M2M – machine-to-machine, mainly business-oriented – and IoO – Internet of Objects, including wearables (bracelets, thermostats, cameras, watches, glasses, etc) – might provide a great opportunity to European manufacturers to retake a part of the electronic devices market (€761 billion worldwide in 2015 without regard to associated services).

From this context, IDATE has developed in its Digiworld Yearbook 2015 three scenarios for Telecoms 2025 with an average annual growth rate worldwide over 2014–2025 under each scenario:

• ∙ ‘commoditisation’ scenario (–2%) in which internet players gain a foothold in distribution with a (smart cloud / dumb device) model whereas Telco operators sell them wholesale connectivity;

• ∙ ‘connectivity+’ scenario (+2%) in which Telco operators invest in quality networks and succeed in offering enhanced connectivity services to both end-users and content providers/application developers;

• ∙ ‘digital mall’ scenario (+5%) in which Telco operators distribute vertical services (video, music, finance, health, energy, security, education, transportation, etc) and rely on their enhanced connectivity offers.

A foresight exercise is a management tool to guide a strategy and not to deliver a forecast. Now, let us look at Telecoms in Europe.

If the European Telecoms industry had significant power in 2000, its position today has largely become a controversial issue. This weakening has an inappropriate impact because of the increasing integration of telecommunications in the various aspects of the digital transition of economies and societies.

3. The European Commission’s Reaction

Under the circumstances, it is Europe’s duty to react, and it is simplest for me to quote European Commission President Jean-Claude Juncker when unveiling his agenda for a new start for Europe: ‘By creating a connected digital single market, we can generate up to €250 billion of additional growth in Europe in the course of the mandate of the next commission.’

To this end, the European Commission on 6 May 2015 published a communication to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, proposing to build its Digital Single Market Strategy for Europe ³ on three pillars:

• ∙ better access for consumers and business to online goods and services across Europe,

• ∙ creating the right conditions for digital networks and services to flourish,

• ∙ maximising the growth potential of the European Digital Economy.

A 2015–2016 roadmap of 16 measures for completing the Digital Single Market is attached to the communication.

First, it is important to notice that nine out of the 16 measures turn on general EU rules related to digital content purchases, consumer protection, cross-border delivery, e-commerce, copyright and VAT; in other words, rules related to a true European single market so as to build a fair level playing field for all the stakeholders (citizens and companies).

It is also of utmost interest to examine closely some of the seven measures directly concerning Telecoms. These measures make up the core of the last two pillars, and I want to comment on them.

• ∙ ‘present in 2016 an ambitious overhaul of the regulatory framework focusing’ notably ‘on (i) a consistent single market approach to spectrum policy and management, (ii) tackling regulatory fragmentation to allow economies of scale for efficient network operators and service providers and effective protection of consumers, (iii) incentivising investment in high speed broadband networks (including a review of the Universal Service Directive).’

This denotes a clear and pertinent analysis that the too long ex ante regulation during the last decade has been unbalanced towards service competition based on the asymmetric SMP (significant market power) principle, unbalanced to the detriment of high-speed fixed and mobile infrastructure investment.

A Repair Action Plan is urgently needed: a Repair Action Plan which is expected to go much further and faster than to only address roaming and net-neutrality; a Repair Action Plan that does not limit itself to impose a unique methodology for calculating tariffs but which dares cover a real price convergence.

• ∙ ‘launch before the end of 2015 a comprehensive assessment of the role of online platforms, ⁴ including in the sharing economy, and online intermediaries, which will cover such issues as (i) transparency, for example in search results (involving paid for links and/or advertisement); (ii) platforms’ usage of the information they collect, and relations between platforms and suppliers; (iii) constraints on the ability of individuals and businesses to move from one platform to another.’

It is obvious that this question lies at the heart of the challenge described above, between the three IDATE scenarios ‘commoditisation’, ‘connectivity+’ and ‘digital mall’. An underlying result of this might well be complex sequences of M&As – Mergers & Acquisitions – in-market and cross-border between operators themselves, and between operators and OTTs.

• ∙ ‘initiate in the first half of 2016 the establishment of a Public-Private Partnership on cybersecurity in the area of technologies and solutions for online network security.’

I cannot do any better to emphasise how important an issue this is than mention that Professor Gelenbe is the coordinator of the European FP7-ICT project NEMESYS (enhanced NEtwork security for seamless service provisioning in the smart Mobile EcoSYStem) with partners from Greece, Germany, Italy and Spain.

• ∙ ‘propose in 2016 a European “Free flow of data” initiative … addressing the emerging issues of ownership, interoperability, usability and access to data in situations such as business-to-business, business-to-consumer, machine generated and machine-to-machine data.’

This fundamental issue directly concerns the European notion of data ownership, which is controversial to internet service providers who prioritise the added value created through a data platform. Social acceptance of IoT and the demand intensity of Cloud services are at stake.

• ∙ ‘launch an integrated standardisation plan to identify and define key priorities for standardisation with a focus on the technologies and domains that are deemed to be critical to the Digital Single Market, including essential sectoral interoperability and standards in areas such as health (telemedecine, m-health), transport (travel-planning, e-freight), environment and energy.’

Both concepts of a European single market and a global initiative are consistent in this area, taking into account that standardisation nowadays has to be carried out beyond the telecoms sector and into the context of the internet, and also account of diverse regulations concerning applications.

I end here my comments on the European Commission’s communication after reporting that for ‘delivering [this] Digital Single Market’, if approved by the European Parliament and the Council, the European Structural and Investment Funds (ESIF) are expected to programme €21.4 billion into this area.

I have dwelled upon these issues related to telecoms because I believe that a strong European Union can be at the source of a real renaissance of an innovative Telecoms industry in Europe.

4. Key Technological Actions

I would like now to highlight three technological actions that I consider key. First, micro- and nano-electronic components and systems, ⁵ semiconductors and their value chains, ⁶ underpin innovation and competitiveness in all major sectors of the economy. In Europe, the semiconductor ecosystem itself employs approximately 250,000 people directly. More than 800,000 people work on the integration of components into systems, applications and services across Europe, and 2,500,000+ are employed in the complete components value chain. Overall, micro- and nano-electronic components and systems enable the generation of at least 10% of GDP in Europe and the world. ⁷

An action plan is built notably on the experiences gained in public-private-partnerships, such as the ENIAC Joint Technology Initiative. Part of the new investment is to be done within the new ECSEL (Electronic Components & Systems for European Leadership) Joint Technology Initiative. The proposed program is based on €50–60 billion of government finance (including grants and loans from different sources) to enable total investment in excess of €200 billion in the European micro-electronics value chains.

The proposed goal is to double the economic value of semiconductor component production (physical and virtual) in Europe by 2020–2025. It is based on a three-pronged approach of demand-pull and supply-push, involving users at the earliest stage via demand accelerators for wide diffusion.

As the European public sector represents more than 40% of economic activity, it has a key role in setting the right legal and incentivising framework:

• ∙ Launching goal-driven trailblazer projects on ‘Smart Everything Everywhere’ in order to ride the next Internet wave by integrating networked electronics in autonomous mobility, smart personal companions, food production-distribution, hospitals, digital manufacturing.

• ∙ Setting up location-based world-class reference zones of testing, integration and deployment on smart innovations support.

• ∙ Developing across Europe networks of specialised and excellent competence centres offering ‘one stop shops’ for any business that wants to develop, experiment, produce and commercialise innovative products and services with ‘digital technology inside’, and preparing and strengthening the supply chain.

Europe today is lagging seriously behind in terms of investments in silicon production capacity. There are positive signs but a lot of efforts still lie ahead of Europe through:

• ∙ A new and ambitious public policy with a more focused support to R&D&I aligned to an agenda proposed by ECSEL, support to investments in first production capacity in line within the revised state aid rules, and access to loans financing with favourable conditions to attract investments in manufacturing capacities.

• ∙ A clear commitment from industry investing in manufacturing pilot lines supported by a focused investment package.

• ∙ Support to the wider design ecosystem for the development of technology and products in cross-cutting opportunities such as security and autonomy, as well as in emerging areas such as wearable electronics, robotics, bioelectronics and 5G communications.

Providing a suitable framework in the training/education infrastructure, and better regulation and harmonisation, international trade, as well as protection of IPR will be needed. Actions including designing university programmes, identifying regional ‘ICT Training’ Centres of Excellence, setting common quality standards for ICT training, and supporting university/industry partnerships to identify needs and to share the responsibility for skills development, access to Electronic Design Automation tools especially for SMEs, will all be needed.

5. Future Internet Research and Experimentation ⁸

The internet is now much more than it was ever envisaged to be. Rather than simply a communications system, it has become the backbone of modern society. For many it is inconceivable to live life without being ‘connected’. New and unexpected applications and services are emerging from cutting-edge technological developments that then shape the requirements for future applications.

The growth of the internet is strictly intertwined with socio-economic, environmental and cultural developments. The Internet is consequently a complex and evolving entity where any technological development, no matter how small, may have multifaceted and even unexpected consequences.

Any consideration of new ways to approach the internet from the most fundamental level simply cannot be limited to paperwork. It requires early experimentation and testing in large-scale environments, even though some of these ideas might only be implemented in the long-term.

The Future Internet Research and Experimentation Initiative (FIRE), launched in 2007, is addressing this need, creating a multidisciplinary research environment for investigating and experimentally validating highly innovative and revolutionary ideas for new networking and service paradigms:

• ∙ FIRE is promoting the concept of experimentally-driven research, combining visionary academic research with the wide-scale testing and experimentation that is required for industry.

• ∙ FIRE also works to create a dynamic, sustainable, large-scale European Experimental Facility, which is constructed by gradually connecting and federating existing and upcoming testbeds for Future Internet technologies.

• ∙ Ultimately, FIRE aims to provide a framework in which European research on Future Internet can flourish and establish Europe as a key player in defining Future Internet concepts globally.

FIRE offers cutting edge facilities that cannot be inexpensively reproduced. It offers them to the Net Futures research communities (researchers in Cloud, cyber physical systems, big data) and for Horizon 2020 as a whole (e.g. Smart Cities, Manufacturing, eHealth). FIRE offers access to the experimenter and research community to increase the impact of their work. Experimentation services are offered to reduce time and cost to perform experiments.

Since its launch in 2007, FIRE success stories have to do with a broad scope of technologies:

• ∙ improving IoT solutions using cognitive radio facilities + broadening the impact of cognitive radio (facility project CREW);

• ∙ experimenting with LTE and SDN resources for enhanced end-user QoE (facility project FLEX);

• ∙ opening the OneLab Experimental Facility with European and International Impact towards a globally-agreed upon standard for the Slice-based Facility Architecture;

• ∙ experiments in a Twilight Space (3D-LIVE project, facility project EXPERIMEDIA);

• ∙ evaluation of RF-based Indoor Localization Solutions for the Future Internet (EVARILOS project, facility project CREW);

• ∙ enabling Experimentation on Content-based Architectures with Wireless and Software-Defined Networking (SMARTFIRE international project);

• ∙ offering key enablers for validating innovating 5G PPP concepts in wireless technologies, cognitive radio, cooperative and cognitive networking, spectrum sharing, energy efficiency, IoT, and so on.

FIRE currently offers to customers from industry (including SMEs) and research, amongst other things, access to leading edge testing equipment and infrastructure for sensor networks (IoT), mobile broadband networks (4G VoLTE, ViLTE, RCS ⁹ ), Cloud/SDN, wired networks (fibre), multimedia and underwater communications. All of the FIRE facilities have evolved in a demand-driven way, supported through Open Calls and a new mechanism called ‘Open Access’, which offers experimenters the opportunity to use FIRE facilities for free, both during and beyond the originally planned lifetime of the respective project. CREW (Cognitive Radio), FORGE (eLearning) and OneLab (Core Networking) are current examples of FIRE facilities offering Open Access.

As far as education and training are concerned, the EU’s FIRE programme and the Knowledge Innovation Centres (KIC) of the ICT Labs can leverage the multiplier effect, and:

• ∙ Adapt and use existing FIRE tools to support Education and Innovation;

• ∙ Allow FIRE Facilities to benefit from the KIC visibility;

• ∙ Ensure sustainability when joining resources across KIC nodes;

• ∙ Enhance the mobility of faculty, engineers and students.

Through learning by doing, education has unique opportunities to benefit from the maintained and supported large-scale real-world-like infrastructures – both from the utilisation of tools and of the practical environments.

6. Vertical Applications

The enduring lesson throughout the last 10 years has been that there is no success possible to the European Telecoms policy if an ecosystem approach is abandoned. In other words, the repair action plan, which I have already referred to, must be backed by a combined (market pull – supply drive) strategy, which is a key parameter for a successful European recovery. This is the way proposed for a new micro- and nano-electronic strategy, and is also the paradigm of the FIRE programme. For them, three areas of opportunity for high demand growth, which have a good fit with European strengths and skills, are identified.

1. (1) Vertical markets where Europe is strong and there is above average growth, such as automotive, energy, medical and life sciences as well as security.

2. (2) Emerging markets for smart connected objects and the Internet of Things (IoT), where industry in Europe is well positioned to benefit from the development of anticipated ‘SmartX’ markets.

3. (3) Markets in the changing landscape of mobile convergence, which constitute opportunities to be captured, e.g. by maintaining leadership in the design of low power processors and growing leading edge semiconductor manufacturing.

The value chains of future HPC and Big Data technologies, materials and applications, will similarly be able to enter into the pervasive domains of climatology, environment, and agriculture. Thus, in all sectors of the economy and across all regions, via cables, fibres, radio base stations or satellite constellations, smart connected objects, IoT, Cloud and Big Data analytics can bring radical improvements to most aspects of our personal and social lives, and improve industrial processes, products and services.

To this end, a set of European instruments aims to remedy the situation of national fragmentation or ineffectiveness, and to gather the conditions that support the realisation of the scenario Digital Mall:

• ∙ PPP (Public-Private Partnerships), which mobilise resources and stakeholders from all across Europe, with public financing and H2020 funding to innovation used as a seed investment.

• ∙ JIP (Joint Initiative Programming), whereby Member States agree, on a voluntary basis and in a partnership approach, on common visions and Strategic Research Agendas, with the best ad-hoc mix of Member States and Commission instruments.

• ∙ IPCEI (Important Projects of Common European Interest), which combine funding from H2020, ECSEL, regional and national Funds and ESIF.

In addition, the newly established EIT ICT Labs Master School provides students with a strong ICT education combining a top technical programme ¹⁰ and an Innovation and Entrepreneurship Minor. ¹¹ The students that are admitted enter Master’s level education at the university of their choice, depending on their technical background, and they will then move to their exit point university, which will be located in a different country in Europe.

Therefore, the EIT ICT Labs Master programme is an important foundation for training top specialists for the vertical markets of the ‘connected digital single market’ that is advocated by the European Commission.