Appointed head of the Belgian telecoms regulator (IBPT) nearly a year ago, Luc Hindryckx has had time on his hands this summer. The Council of State has just confirmed the appointment of this industrial engineer, who has an MBA. Several political parties would have preferred other candidates over him. Under his management, the regulator has already imposed a reduction in termination tariffs and hit Belgacom with an €800,000 fine. Some see this as a sign of a tougher line being taken towards the former monopoly. But, although he has come from the private sector, Hindryckx refrains from being “the one who comes from the competition”. Above all, he says he wants to create the right conditions for investment, which is currently too low in Belgium. The new team’s strategic plan will be unveiled this autumn.

Your professional career seems to worry some actors in the sector.

It is not correct to see me as the person who comes from the competition. We have an approach that is objective, as far as I’m concerned, and neutral for all actors in the market. It is right that Belgacom, as an incumbent, is dominant on different markets and therefore sees more “remedies” imposed on it. This is an objective application of the regulatory framework. That won’t change in the future.

So your team won’t be pushing through a change of approach?

The approach will be different in so far as we want to have regulation that is effective. We need to realise that lots of operators have already come out of the Belgian market. They came, they got their fingers burnt and they left again. Where there’ll be a change of approach is that we see it as an obligation to understand the reality of operators, whatever they are, and to come to an effective regulation. […] One of our priorities is to drastically improve operational processes. Between the moment when an alternative operator is going to check if a customer is connectable until the moment when his/her line has to be repaired, all these processes should work in a well oiled way. Why? To allow alternative operators to line up in terms of operational excellence and exert pressure on tariffs. Without their own network, it is difficult for them to position themselves vis-à-vis the product leader. They are always behind. In the competition for services, the area of operational excellence needs to be developed.

Is it really up to the regulator to tell them how to develop their ‘business model’?

We mustn’t tell them how to develop their business, but it’s up to us to understand why an operator will be able to develop products and gain customers who will generate value for shareholders. If you destroy value for the shareholder in a competitive and globalised market, the investor will leave Belgium and go to another country. That’s key today. So it’s not up to us to define the strategy for operators, but we must together understand the size of the market. We must fully understand the economic aspects. We must also allow operators to have a free choice in their strategic alignment.

To strengthen competition, some people want to split Belgacom up into a telecom services company and a network manager rather as has been done in the energy and transport sectors.

It’s a solution that is complicated to put in place but which, in so far as resorting to conventional “remedies” may continue to pose a problem, could prove to be necessary. It’s something that one doesn’t have to impose automatically, but which must be considered as a last resort if other measures taken did not bear fruit. The quality of operational processes is a key factor.

With its Digital strategy, the European Commission is aiming to make telecoms contribute more to economic growth in Europe. How do you see this?

We can’t ignore the fact that we are in a globalised economy. All citizens understand today, when a factory moves abroad, what a globalised economy means […]. Europe is a potential market of 500 million consumers. It’s the biggest market in the short term. More than China, because it won’t be tomorrow that, in China, 500 million people will be able to consume the value created by telecoms… In this respect, harmonisation is important, while taking account of national differences. GSM is a good example. GSM was a standard harmonised in Europe and was a fantastic success. Europe has a choice: create a market for 500 million people that is going to become one of the most attractive in the world or fragment this potential and have the smallest markets in the world co-existing next to each other. In terms of investment, R&D and innovation, Europe must manage the integration of the telecoms market. That’s a decision which is going to define the wellbeing of Europe in the coming years.

Precisely how do telecoms contribute to European wealth?

Before 1998, the telephone costs of enterprises were high, certainly in Belgium, a country that exports a lot. With liberalisation of the sector, we noted a drastic fall in costs following the cuts in tariffs and certainly in international tariffs. So there was a direct impact on the costs of enterprises. Later on, the arrival of the GSM led to an increase in costs and therefore the opposite effect, but which was offset by a rise in productivity. The third step was the reduction in the price of access. We saw the price fall very markedly and capacity increase. We were able to centralise equipment. The latest evolution of that is ‘cloud computing’ where, at last, you no longer need anything because capacity is so cheap that you can have everything on a network. That is an evolution which brings down costs and increases the efficiency of our companies and not just at the IT level. Today, telecoms are at the heart of companies’ processes and, if the internet were to disappear, companies would no longer be able to work.

The scenario of increased regionalisation of telecoms is sometimes envisaged. What do you think about that?

As I was saying, fragmenting the market doesn’t help. Regionalisation would have several consequences. Firstly, it would increase the costs of the sector. But in the context of the globalisation of economies, being an attractive market is essential. Once you make things more complicated, either by reducing the size of markets or administratively you have to speak with several parties, you increase the risk and you reduce the return. And you therefore markedly reduce the attractiveness of the market. Frequencies don’t stop at borders. Take Brussels, which is so small that you are going to have to coordinate. One would even have national roaming. Currently, in terms of 3G and data, Brussels is no doubt one of the least well covered European towns because of standards. Regionalisation would also have an impact on the state’s budget. It would increase its costs because you would need to increase the number of bodies. Thirdly, there would be an impact on the consumer. Even today, it is not clear what is on offer. Once you cut it into small pieces, your tariffs will be different, the offers are going to become more complicated and will be even less understandable for the final consumer. And they will be less able to have their rights respected. If they receive an invoice that isn’t correct, they will hesitate before challenging it, before going to the mediation service. Finally, social cohesion could be affected because universal service obligations could be different depending on the regions of the country.