The city network's passionate lobbyist

The relay goes on to Mikael Ek, CEO of the Swedish City Network Association

We start with a burning question:

Is 5G an alternative or a complement to fiber-based connectivity?

The 5G issue is extremely important. Fiber and 5G will live in symbiosis in the continued rollout. I say this from the perspective that 5G will not work at all without a well-developed fiber infrastructure. Since 5G is a radio technology, it is limited and in 5G it is the intention that you should be able to surf on your device even faster. This is based on the radio masts becoming significantly denser between each other so that each mast or antenna can offer faster surfing. But it is also based on the fact that each mast is fiber-connected, and this means that fiber and 5G will live in symbiosis in the continued roll-out.

5G will be a technology that works much more in real-time solutions, without delays to be able to be used in, for example, autonomous vehicles. There, it is very important that the masts are fiber-connected to reduce the delay effects. We will still to a very large extent have fiber all the way home in the apartments, but when on the go, 5G will be used, while the supply of the mast will be a combination of fiber and 5G. This means that we will primarily see upgrades in the fiber networks, but we will also see a densification of the fiber infrastructure, especially in the city areas, to meet the need for 5G functionality.

By the way, we have one of the world's best 4G networks today, according to all measurements, and that has to do with the fact that the operators have been able to rent so much fiber for their 4G masts that we have fantastic capacity in the 4G networks.

What do the open networks mean?

We have a fantastic broadband market in Sweden. The whole foundation for this is the city networks that built fiber networks and very quickly came to the realization that they would not deliver end customer services themselves but instead open up our infrastructure at different value levels that enable different service providers to offer different services in competition.

City networks have become a guarantor of equal treatment of one player, regardless of whether it is a small local company or if it is a large national player such as Telia. At the same time, they can fight for customers in the city networks in a fairly equal way. As a result, we have an entire industry of several hundred different types of service providers in the city networks. Now the well-known Bahnhof has become a multi-billion company that has grown thanks to the city networks. Add to that a bunch of regional and municipal companies that offer consumer services to the household, as well as package cloud services to the local business community and deliver fairly advanced IT services. They can do this because there is a basic fiber infrastructure.

What makes the open networks so special?

The open fiber market is largely unique if you look globally. The open Swedish market means that in principle all fiber infrastructure is available for rent. We have a common system, a kind of trading system for fiber, where almost all network owners have put their fiber infrastructure together with the types of products they offer in it.

This means that the operators are temporarily inside the system and make inquiries and the system becomes increasingly automated. You can, for example, make a request to connect two addresses and see that there is a standardized product so just click and order and then it's done. One hub is the system itself, the other hub is the collaboration - that we have gathered the entire industry around the table and negotiated basic terms and standards that mean that the user does not have to shop from a variety of city networks. So even though we have a large number of small players in local or regional online markets, it is still a uniformity to be able to offer fiber in that market.

Other countries often have only one major national player, typically a former telecom or cable monopolist, who offers to expand the fiber. In Europe right now, many of the 5G operators are building their own fibers for their masts. In comparison, we are well prepared in Sweden, when it comes to the continued roll-out of 5G.

Who have you gathered around the same table?

We have a negotiating role in this context, with both representatives from the city network side and a number of representatives from the operator side where standardized conditions for service levels, product specifications and the like are agreed upon. Therefore, it is quite easy to order a fiber infrastructure from a city network regardless of where you are in Sweden. You do not have to make the individual contacts that you would otherwise have to make with the many city networks, which are 160 covering almost 200 municipalities.

We protect city networks and work a lot with different types of standardization issues for the industry. Robust fiber is another such area where we have gained the industry's trust to develop standardized solutions.

You mention lobbying - how much have you been involved in doing?

One area we pursue is influence and lobbying. In that work, we produce an incredible amount of research and draw analyzes and are out and debate a lot in the media. We have a great insight into the market and the fact that we can divide it up at local and regional level means that great interest is created in the regional media to cover these issues.

The issues we mainly pursue are broadband and digitalisation. About 80 percent of the topics we do are for the entire industry. Then we have special interests regarding city networks. An important topic is to give the city networks the right conditions to be able to continue operating in the market. There, we have been instrumental in working for an exception to the localization principle.

What does the localization principle mean?

The majority of the city networks are municipally owned. The legislation we have in Sweden states that a municipal activity must operate within its municipality. But if you put on a map of Sweden and look at Sweden's 290 municipalities, it is clear that the municipal boundary is definitely not the optimal operating boundary when it comes to the type of network infrastructure activities that you have in the city networks. Therefore, other sectors such as electricity and water, sanitation with further exceptions where you look at what is best for the municipalities.

Right now, it is an important issue for us to be able to continue over time with good continuity, robustness and operational reliability in the networks. It requires sufficient operating volumes and since we have many small municipalities in Sweden, it is a challenge. Then it must be possible to get free hands to cooperate across municipal boundaries. Happily enough, the government in March decided to start an investigation into these issues and at the end of 2021 we will see how these regulations can be formatted for city networks. An exception will reduce the costs of further broadband expansion and speed up the opportunity for more citizens to participate in the rapidly emerging digital society.

Have digitization issues been overshadowed in recent times?

We need to differentiate between digitalisation and broadband. The latter issue has nevertheless received a great deal of attention over the past five or six years, and we take it a little credit for the association that we have been out a lot and talked about these issues, especially at the local level. Many municipalities have fairly clear broadband goals at present. There is a good understanding that these issues are important.

At the national level, on the other hand, national politics, there is a gap. I think it has to do with the fact that historically the political parties decided early on that digitalisation issues are a market issue that should not be interfered with from a political point of view. But as these issues have become a strategic factor and absolutely crucial for the development of society, it is a concern that the political parties have not kept up with the issue.

Why is it not a matter for the market itself to sort out?

There is a gap between what customers are willing to pay and how much market participants are willing to pay for what it costs to expand. That gap currently amounts to SEK 18-20 billion. At present, only about ten percent of the money is secured in support until 2025. If the government does not do something further, we will not achieve the goals.

Even if they were to add in a lot of money now, we will not achieve the goal because there is no capacity to expand in such a short time because it is difficult long-distance geographical areas. If the pace of expansion takes another couple of years, it's okay, the important thing is to keep going. There we can state that neither the Social Democrats nor any other parties have taken on the issue and said that "this is what we are going to solve".

The pandemic of the past year has to the highest degree shown the need for us all to have a fast, robust, stable connection to be able to participate in society, regardless of whether we work, are in education or in care or otherwise. It really should have made politicians wake up!

In what way is the digitalisation issue a threat to democracy?

Traditionally, you win elections on healthcare, school, elderly care and immigration issues. So far, no political party has won an election to pursue digitization issues. So how long does it take before the digitalisation issue falls into the spotlight of politicians? At present, there is nothing in the political party programs that describes how they view the digitalisation of society. They are also completely in the stands when it comes to the field of social media and how global companies such as Facebook and Google take power and position. Politicians do not understand what it is about and it does not feel like they have a committed agenda in the issues. This is serious based on the momentum that digitalisation has taken in society, especially in the last year.

Ultimately, it is a threat to democracy. In dictatorial countries, people have been very quick to take this and use the internet in the "wrong" way, where you block out various access to information or turn off the internet when you have some type of concern within the country. If we do not have control over our own digitalisation, Sweden risks being hit by hostile initiatives because we have global players who control content and platforms in different ways.

What do you mean by digital A and B teams?

When we investigated market trends before the pandemic, we used other measures and tried to look ahead 5-10 years. We noted that there will be some relocation from the city centers, because the digital society allows you to operate regardless of where you are.

Then came the pandemic and what were tendencies became realities and took a big step in a single year. It therefore becomes even clearer who the losers are. The small communities and districts that today cannot offer a good connection are lost. People do not move there.

Half of the countryside is still without fast, robust broadband. You may be living on an old copper connection or a bad mobile signal or similar. We usually talk about digital A and B teams. Those who live at the far end are those who should have the best connection, because that is where they and society have the most to gain from having a good connection.

Where does it clash between market forces and political forces?

As a consumer, you have a limited willingness or ability to pay. Regardless of whether you are a city network or a private player such as Telia or IP Only, you must get your cost together and be on the plus side in the bottom line. Here, the gap is SEK 18-20 billion.

If this were secured from a political point of view over a period of time, we would probably have a much brighter future for the rural municipalities than is the case today. Society today lacks political control over the welfare structure such as care, school, sports, and culture.

Do you think that rapid political action is needed to start development?

Yes! There are no market forces pushing to build the necessary fiber infrastructure. It is needed to create conditions for finding new solutions, such as autonomous transport that can replace expensive transport over long distances. With a longer time horizon, it is good for the environment and also from a cost perspective.

If we still expand the fiber infrastructure in the find granualrity, then we are given the conditions to establish 5G networks that enable a lot of different types of digital control, such as autonomous vehicles. Networks are a societal infrastructure on an equal footing with road, rail, water or shipping, and the state should have a holistic approach, even if, as today, it has a mix of public and private actors.

There is a lack of clear control and a supply of the sector that ensures that you can bridge the gap between what you are willing to pay and what is needed. The state should co-finance because society as a whole will benefit from the investments. The municipalities alone are too financially weak and need the state backup to carry out an expansion. Ultimately, there is no one but the government and state that can make this happen. The longer we delay it, the bigger the gap.

What more future areas do you see?

IoT (Internet of Things) is one such. Not only for monitoring and care at home but we will also be able to monitor water mains, electricity networks, vacant parking lots and events at intersections. The possibilities are many.

In a few years' time, the municipalities will be the largest joint user of IoT gadgets for their operation and management of the municipal activities. But even though we can see that many city networks and actors are working on such projects, nothing happens. Our 290 municipalities have a large mandate and decision-making power, which means that we can have municipalities that do in 290 different ways. The challenge is that we lack ministries and authorities that work with scenarios and guidance and provide the guidelines that many of the municipalities demand in order to be able to plan for the coming years.

Elderly care is an area where much more clarity is required from the Ministry of Social Affairs. There is a great potential for improvement for ministries and authorities in backing up the municipalities in their digitalisation journey. Sweden's municipalities and regions have an important role, but it is still the ministries that must take responsibility. When it comes to technical solutions and software, there is already a lot of that. On the other hand, there are no answers to the questions about how municipalities and regions should package the services and how the implementation can be done in an ethically morally good way for the elderly, for example. For politicians, digitalisation is like a gray haze, they do not understand.

What has held back the German market?

In Germany, it suffers from a strong monopolist - Deutsche Telekom, while in Sweden, Telia, as a former monopolist, has had a liberal view and accepted competition, which has given Sweden a front position.

In general, it also provides good profitability. Despite our large elongated country to the surface and quite a few inhabitants, we have a relatively well-developed fiber infrastructure and we are among the best countries in Europe for that expansion. In Germany, only a few percent of German residents have access to fiber despite its smaller area and just over 83 million inhabitants.

In Sweden, we are up to 85 percent. The difference is that in Germany, the old monopolist has managed to hold back the market for a very long time. But now it is about to change. Several of our members are working on the German market and it will explode in a few years' time. But they are incredibly far behind when it comes to customer prices, freedom of choice among consumers and just such a thing as that we have Netflix and HBO, the Germans hardly know what it is.

The Germans are incredibly focused on legislation and regulation. Deutsche Telecom is the big dominant. My experience is that if our city networks had reasoned the same way in the mid-1990s, we would not have come this far today either. Starting and driving the market has been an important factor.

So is service competition a driving factor?

You do not build with the same type of service competition in Germany as in Sweden. Network owners procure a service provider, which means that there is no competition. Building better fiber networks is quite natural, of course there have been improvements during the 20 years we have built. The active equipment is replaced on a continuous basis about every five years, but the old dark fiber works in many ways very well. You must also have respect for the fact that it takes time to build.

We have a very good competition in Sweden in that the city networks were on plan and started offering open networks. This actually forced Telia to open up its infrastructure so that Telia also now offers open fiber that enables various players to rent. It would not have happened without the city network model. So even if there is only one fiber infrastructure in the hill, there is a good service provider competition on the basic fiber infrastructure.

What created the competition?

My industry colleagues in Europe are jealous of Sweden. I still have a hard time getting others to understand the benefits of sharing the infrastructure and that you can share in parallel in a portal where there are more service providers to choose from. It is very difficult to describe how such a dimension works.

The German Stadswerken (German energy companies) that build their fiber infrastructure usually procure a service provider and think that they have created competition. For the customer, however, there is only one to choose from. In that respect, Sweden is unique. We were out early. The driving force in the early 1980s was the home PC reform, where companies gained tax benefits if they gave PCs to their employees. Jonas Birgerson was also an important lightning conductor and foreground figure in the late 90s and coined the term broadband. It gave a lot of energy to the city networks to continue to expand their infrastructure. Where we are today is what Jonas Birgersson said would take a couple of years. It takes an incredibly long time to expand! It is complicated to plow fiber in the ground.

What does demand in the industry look like during the pandemic?

In all the tragedy and the negative around Corona, we can state that things are going very well for the entire industry. You are sitting at home, you are increasingly dependent on having a good connection. Staff must surf on companies' servers and companies and organizations have realized that they need to upgrade their connections so that the sector has also increased. In general, the entire industry has a significantly greater demand for both faster broadband but also for new types of connections that are expanded in the wake of the pandemic.

Have the nets stood firm during the pandemic?

The pattern of behavior among humans has changed dramatically, but in the nets it has only been noticed as a ripple on the water surface. In Germany, family members get slot times - between 11-12, one child goes to school digitally and the next hour, the mother can work digitally and the third hour, the other child can go to school digitally. Not everyone can go to school or work at the same time.

The insight of the governments of many countries has increased significantly now and the EU has mainly raised two issues related to the pandemic. One is the digitalisation "Gigabit society" and the other is a green environment. There will be a lot of stimulus money in the EU in the coming years.

What do you see in the crystal ball?

Public digitization will be dramatic. There are so many opportunities in the municipalities if they are only given the right local conditions to succeed. But considering that we have 290 municipalities that do not receive enough support from various ministries and authorities, it will be a rather messy journey. There will be a great deal of uncertainty and insight into the consequences of different types of decisions.

Once we have overcome that hump, there will be a fantastic growth journey and in ten years' time, our society will have fundamentally changed. Then we have a completely different type of welfare apparatus and an individualization in the welfare offer. We will probably experience this as an improvement despite the fact that self-administration will increase. In our software society, it is the individual who sets his default, who decides how he wants it. Therefore, it is also about public education and learning the art of navigating the welfare offer. A lot of coaching and guidance will be needed for everyone to be able to take advantage of the digitization opportunities we will see in the coming years.

What did you do yourself on Millennium Night?

Before the millennium night, I printed out a hell of a lot of critical documents on the computer. So I had a real stack of documents before the turn of the millennium if a computer were to be shut down. I saved on several different flash memories. But we celebrated New Year's Eve with good friends in Växjö and wanted to watch awesome fireworks, we thought, but it was the fog of the world that night so it did not go so well, haha.

The RELAY goes on to Stephan Albers in Breko with the question:

In Sweden, we have had “fiber fever” for several years, where both households and companies have a strong demand for fiber connection. What do you see as the single most important effort to create a corresponding demand in Germany?