Wik in Wi Continuing Through February

WIK Online Workshop 19 January and 21 2021 on the Relevant Market Recommendation 2020

The new EC Recommendation on Relevant Markets: key changes and implications for the sector

In December 2020, the European Commission published a new version of the recommendation of markets relevant for ex-ante regulation. In the new Market Recommendation the Commission took into account - among other contributions - the results of a study prepared by WIK-Consult on "Future electronic communication markets susceptible to ex ante regulation". On 19 January 100 workshop participants explored the most important changes in the new Market Recommendation 2020 and its implications for the sector. Kamila Kloc who leads the team, which was responsible for developing the Relevant Market Recommendation at the European Commission highlighted the most important issues related to the new Recommendation, Ilsa Godlovitch and Christian Hocepied presented the main results from the study. On 21 January Dr. Cara Schwarz-Schilling and Dr. Sonia Strube Martins discussed the implications of the new Recommendation for Germany with about  40 participants. Since the publication of the first Market Recommendation in 2003, the number of markets has been reduced from 18 (including 7 retail markets) to 2 wholesale markets in 2020. On the one hand, the reduction of markets reflects the fact that competition has increased. On the other hand, competition continues to be limited. In this context, the Code offers new possibilities to counteract competition problems. Nevertheless, safeguarding competition still requires SMP based wholesale access regulation. The European Commission has made it clear that more regional differences are to be expected. The 3-criteria test is in itself a good principle for the application of sector-specific regulation. The 3-criteria test can also be applied to markets outside the list by the national regulatory authorities and enables national regulatory authorities to take into account national circumstances in the market analyses.

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European Commission publish WIK-Consult study on international postal services

Far-reaching changes in the import of postal consignments into the EU

E-commerce has boosted postal imports of low-value consignments from Asia, particularly China, to Europe. This significant growth has challenged postal operators and customs authorities in the single market. The WIK-Consult study entitled 'International Postal Service, Remuneration and Regulation' explores the development of international postal services in the EEA and assesses the recent UPU reforms of the remuneration system including their impact on designated operators. The study identifies and describes import models for international e-commerce consignments along with the requirements and procedures concerning VAT, customs and security regulations. In this context, it describes the reforms of the import VAT and the security rules (ICS2) and how they will affect international postal and express services.

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Digitisation as an enabler for resource efficiency in companies

Study commissioned by the Federal Ministry for Economic Affairs and Energy - Main Report and brochure with recommendations for action for small and medium-sized enterprises

It is an essential political goal to further disconnect the use of natural resources from economic development. Both in its sustainability strategy and with the German Resource Efficiency Programme (ProgRess), the German Government is pursuing the goal of increasing resource productivity. In addition to new materials, white biotechnologies and nanotechnologies, progress in increased resource efficiency is expected from information and communication technologies as well as automation technologies.

The aim of this study by Institut der Deutschen Wirtschaft, IW Consult GmbH and WIK-Consult GmbH is to identify opportunities and to foster resource efficiency against the background of current digitisation trends. In the context of a comprehensive stocktaking, hypotheses were drafted and verified qualitatively in workshops and expert interviews. The core of the study is the representative company survey within the framework of the IW Future Panel. Based on those results, starting points, potentials, success stories and first steps on the way to more resource efficiency with digital support are edited in a brochure with recommendations, especially for small and medium-sized enterprises.

The study results show different starting points for politics and business: Previous political efforts must be further expanded and better bundled across ministries. This also applies in particular to the expansion of knowledge transfer through better linking of various publicly funded services.

The basic requirement for advancing digitisation for resource efficiency is a functioning infrastructure. For this, nationwide broadband and 5G expansion, investments in cloud use and the implementation of norms and standards are key. Policymakers should also ensure legal certainty, especially when it comes to securing infrastructure and data use. Data is the central basis for digitisation for resource efficiency. Curricula and training programmes must be more strongly adjusted towards the new digital competences.

Companies are recommended to review their status quo in digitisation and resource efficiency. Here, available information and advisory services can be applied. In addition, companies should not only consider the two topics of digitisation and resource efficiency integrated, but also develop corresponding strategies for their implementation.

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Digital Sovereignty in Europe – a first benchmark

A balance between achieving autonomy in crucial areas while maintaining a diversified vendor portfolio and international trade relations

The COVID-19 crisis has increased awareness of being dependent on foreign suppliers of critical services and products. Therefore, in the context of ICT infrastructure, Europe is striving for more autonomy, or so called "digital sovereignty".

This stretches from debates on 5G suppliers to initiatives in regards to cybersecurity and a European data infrastructure GAIA-X, but also involves strategic investments in artificial intelligence, robotics and high performance computing. In fact, a substantial share of the €750 billion recovery fund, announced during the Covid-19 crisis, is earmarked for fostering digital economy in the EU.

Our EU benchmark shows that digital sovereignty is however not a uniform concept. Policymakers attribute various rationales and objectives to it and they use different terms, e.g., technology sovereignty or strategic autonomy. Despite different interpretations, there are three common dimensions: (1) privacy, (2) cybersecurity and (3) strategic. Whilst the first dimension revolves mostly around the individual ability to control their digital lives and data, the second and third dimensions refer mostly to the collective level of states' as well as the EU seeking to (re-)gain control and leadership in the digital area.

Around half of the EU Member States still follow a narrow interpretation of digital sovereignty predominantly along the lines of cybersecurity. In Western Europe and in the Nordics the dimension of cybersecurity is supplemented by the privacy dimension. France and Germany as well as digital leaders such as Denmark and Estonia apply a concepts which encompasses all three dimensions whilst the strategic dimension appears to dominate at the moment.

The EU as well as most of the countries analyzed however note that neither digital sovereignty nor strategic autonomy push for autarky or protectionism. Clearly, digital sovereignty is about striking the balance between achieving its own autonomy while still maintaining a diversified vendor portfolio and international trade relations, which are so important for many economies in the EU.

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Digital infrastructures of municipal utilities

Status quo und opportunities

Municipal utilities are already playing an important role in digitization. There are opportunities both in the internal processes of the companies as well as in the construction of public telecommunications infrastructure, which WIK-Consult has investigated for VKU.

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NGA costs: clustering, invest & actual rollout

Bottom up modelling and statistical analysis

By international standards the expansion of fibre-optic access networks in Germany is progressing slowly. In the long term, gigabit bandwidths shall be made available throughout Germany via fibre-optic networks. This paper focuses on the regional dispersion of NGA network costs (FTTH P2P) in Germany by applying means of bottom-up cost modelling as well as statistical analysis. WIK's NGA Model was applied in order to derive cluster-based results with regard to the average costs per FTTH P2P access line. Calculations revealed cost spreads, with the most expensive cluster exceeds the value of the cheapest cluster by a factor of 3.2. The statistical part of the analysis made use of the data set generated by bottom-up modelling. On this basis a robust regression model was established. The analysis revealed that "number of lines per built-up area" represent a more appropriate variable for the cost estimate than the "number of lines per access area", which was previously applied in the WIK-NGA model. For the assessment of cluster criteria we draw on our findings of the regression analysis and applied the identified variables for a multivariate k-means clustering. Results were generated for k=1, .., 50. For the number of 20 clusters we made a comparison of invest per access line and cluster with our initial results of the WIK-NGA model: They show almost the same investment per line in the cheapest cluster; but in the most expensive cluster the multivariant analysis invest figures are well doubled in contrast to those of the WIK-NGA model. Further investigations dealt with the application of invest per line as a cluster criterion itself. Here the calculations show that a reduction in the number of clusters from k = 20 to k = 4 which reduces the level of accuracy from 97% to 90% only. However, the univariate and multivariate k-means clustering methods examined inhibit a systematic disadvantage since they discard the aspect of neighbourhood. In order to take this aspect into account, a first approach was carried out with the help of the hot spot/cold spot analysis; the result is shown in the graphic.

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Fibre infrastructure for smart cities and smart regions

Panel discussion with Annette Hillebrand at Thuringian fiberglass forum Erfurt 2020

How can the growing fiber optic infrastructure be used in a targeted manner and how do best practices for digital transformation in urban and rural areas look like? Annette Hillebrand, Senior Consultant at WIK-Consult and Deputy Head of Stadt.Land.Digital gave an answer to this question on the podium of the Thuringian Glass Fiber Forum 2020 on 17th November 2020 in Erfurt and  a multimedia interview for the Thuringian digital agency's newsletter.

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Source: https://www.wik.org/en/veroeffentlichungen/wik-news/february-2021

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