Standards made in Europe for global use

Abstract

This commentary reflects on the contributions by Egan, Delimatsis and Verghese that provide historical accounts of ETSI’s origin and its dynamic evolution and attempt to explain its resilience. In this commentary, we place focus on ETSI’s unique attributes and their dynamic evolution to arrive at a better understanding of its resilience during critical moments and over time. We identify three such key attributes, namely ETSI’s institutional set-up and openness, its standard-setting activities and flexibility and the ETSI IPR policy. The article illuminates their importance, also in ETSI’s interactions with the European Commission and how these traits originated, were activated and evolved during critical moments. Taken together, these contributions suggest that the governance reforms proposed by the EU risk undermining the attractiveness of open European ICT standardization, a key ingredient of ETSI’s very success in ICT matters.

Keywords:

• ETSI
• standardization
• organizational resilience
• IPR
• ICT
• European Standardization Strategy

1. Introduction

This commentary reflects on the contributions of Egan (2024), and Delimatsis and Verghese (2024). The article by Egan provides a historical account of the origins and growth of the European Telecommunications Standards Institute (ETSI) in a transatlantic context. Delimatsis and Verghese theorize and provide three empirical case studies that demonstrate how ETSI enacted three resilience strategies in its interaction with the EU Commission (EC), in the face of disturbances during critical moments in its history, thereby indicating its adaptive capacity to external shocks and internal uproar.

This commentary places focus on ETSI’s unique attributes and their evolution in explaining its resilience during critical moments and over time. We identify three such key attributes, namely ETSI’s institutional set-up and openness, its standard-setting activities and flexibility and the ETSI Intellectual Property Rights (IPR) policy. The article illuminates their importance, also in ETSI's interactions with the EC and how these traits originated, were activated and evolved during critical moments. This commentary focuses on how ETSI’s traits confer resilience (and legitimacy) onto the organization; their presence (and flexibility) also enhanced ETSI’s ability to respond and adapt during past events. These traits (and their activation and evolution) during crisis moments can also further enhance our understanding of ETSI’s resilience over its lifetime.

This commentary applies theoretical insights from Delimatsis (2023), who draws from the concept of 'ecosystem resilience' (Fath, Dean and Katzmair 2015) to unravel the phenomenon of the resilience of private collective action. It departs from the understanding that a resilient system is one that has succesfully survived through four phases (growth and accumulation, reorganization and renewal), each representing an adaptive cycle in a complex adaptive system. Applying this to ETSI, its state and level of resilience during a critical episode can be explained in relation to its characteristics that allow it to continue or recover in the face of uncertainty, as well as ETSI's position in its own growth trajectory. The three traits identified are unique to ETSI and especially salient in aiding its navigation through critical episodes.

2. ETSI's creation and attributes: institutional structure and openness

Never in the history of the industry has the telecom sector changed so quickly as with the shift from analogue to digital. This shift has only been possible thanks to the combination of different factors, including the infinite possibilities of digitalization that have been paramount (but not only) and well-thought coordination between the EC, the European Conference of Postal and Telecom Administrations (CEPT) and national administrations to provide for an institutional response. Indeed, appetite from the operators and promising technology from the industry were present. However, the institutional setting where this would become a reality was missing.

Capitalizing on this unique moment, ETSI was created in 1988 to help build a single market of telecommunications with a single standard for the 2nd generation mobile communications system. As noted by Egan (2024), under the pressure of competitive liberalization, the EC sought to increase efficiencies to scale up the development of common European standards for new technologies in the information and communication technology (ICT) sector. By avoiding fragmentation, these standards could reduce costs for producers, promote the competitiveness of European business in markets that were becoming more global and reduce technical trade barriers (EC 1990).

ETSI differed from the two European Standardization Organizations (ESOs), CEN and CENELEC, a considerate choice that was in line with the realities of the ICT sector and innovation therein at the time. New common European standards had to be delivered quickly to meet the expectations of the single market programme. The limits of CEN and CENELEC in meeting this challenge had become apparent (EC 1990). Standard development procedures within these ESOs were consensus-based and required the largest possible agreement. Their procedures for public inquiry, examination of comments and final voting caused further delays in standard development (EC 1990). As noted by Egan (2024), ETSI was created more flexible as an open organization that would seek consensus where possible but could rely also on a weighted voting system to make decisions more quickly if needed (also see, Bekkers and Lazaj 2024).

Contrary to CEN and CENELEC, ETSI was premised on the idea that it had to be open to all the stakeholders of the ICT sector regardless of their geographical location, the type of activities or their corporate size. In other words, the production of standards would be initiated and developed bottom-up, factoring in innovation wherever it comes from rather than offering privileged access to European stakeholders compared to stakeholders originating in third countries. Arguably, this key trait of ETSI has contributed greatly to its global outreach, acceptance by the relevant stakeholders and institutional success.

3. ETSI's standard-setting activities and flexibility

Delimatsis and Verghese (2024) illuminate how during various instances, the EC called on ETSI to undergo changes that would ensure greater involvement of national standardization organizations (NSOs) in its work, bringing its institutional set-up closer to that of CEN and CENELEC. In those instances, ETSI enacted a strategy of contestation, using communication to express its disapproval of the EC's demands and expectations. During these critical moments, ETSI could built on its previous successes in standard development. These successes commenced with the GSM standard, which was adopted worldwide, then 3G, 4G, today 5G, with its incredible creation of value, industrial growth and influence worldwide. ETSI by demonstrating the success of its standards, as reflected in their global use and relevance, has sought to convince the EC that changes to its organization are not needed and might even be counterproductive.

It is often neglected that such successes at the industrial level do not come out of the blue but result from a rather long-lasting successful institutional setting and standardization ecosystem that exceeds the European borders. The quality of ETSI standards is ensured by the machinery behind its standard development, which runs smoothly overall. The success of the ‘G’ standards is undoubtedly due to the capacity of ETSI/3GPP to attract all technical talents in an open and self-organized environment. ETSI’s openness and bottom-up approach to standard setting create transparency and respect the WTO principles. Its institutional set-up has attained credibility over the years because of ETSI’s successes, converting further legitimacy and credibility onto ETSI standards, though as Egan notes, the heterogeneity of its membership can give rise to collective action problems as well (Egan 2024, 9).

ETSI is also a developer of European harmonized standards in support of EU legislation and policy, which, as Egan notes, form a small but crucial part of its standards portfolio. ETSI has had to use its strength to find the right middle ground of being a European standardization body and a globally open and consensus-based organization. The institutional peculiarities that ETSI brought about, focusing on an approach that is both market-driven and consensus-based, have brought significant value to the EU economy and its desire to play a leading role in shaping the global ICT landscape. As noted by Delimatsis and Verghese (2024), ICT standards are used across many sectors on which the EU relies for its competitiveness, hence also their strategic importance for the EU in achieving its ambitions.

The EC has been able to rely on ETSI’s technical expertise and openness to deliver standards for the EU to achieve its regulatory objectives. During critical moments when the EC questioned its institutional legitimacy, ETSI could built on the quality, integrity and relevance of its standards and communicate how those have served the European interest to resist changes to its internal governance procedures. The EC has pushed for a more important role for NSOs in ETSI to match the way CEN-CENELEC is working. To the degree that enactment of internal changes can undermine ETSI’s leading role in ICT standardization, which, as Egan notes, “has thrived on its ability to leverage market-driven European standards that include non-European firms”, the proposed reforms would impede the EU in its pursuit of public objectives as well.

Indeed, one cannot stress enough the indirect effect on ETSI of setting the most used standards globally: one should be mindful of how standards are also soft power, giving the penholder a competitive edge and a comparative advantage (Mattli and Seddon 2015). ETSI could rely on its capacity to develop quality standards of global relevance to convince the EC of being the most suited and thus the preferred private partner among the three ESOs to cater for the needs of ICT standardization. Indeed, it can be argued that because of its unique set-up, ETSI is better positioned than the other ESOs to meet the evolving needs of the EC in this domain and that this fluidity of authority contributes to the resilience of the EU standardization ecosystem as well.

4. ETSI’s IPR policy

An important episode in ETSI’s history was ETSI’s pursuance of an IPR policy between 1990 and 1994. The issue of IPR arose because of an evolution in ETSI’s membership, which came to integrate other industries from outside Europe, and more industries related to the telecom sector. Previously, ETSI’s membership consisted of the telecom industry, operators and manufacturers. Conflicts between members over IPR could cause disturbances in bringing products on the market. Since IP could not block the idea of a pan-European system, large interests preferred this issue to be resolved without much ado. These interests used IP as a defence and were unaware of how it could be monetized and used as a weapon, too.

As Delimatsis and Verghese illustrate, the EC instigated ETSI’s cooperation in developing practical rules to discourage abuse of its standardization procedures by dominant interests to exclude competition in violation of competition law. Whilst ETSI’s draft IPR policy was supported by a majority of its members, it was opposed by a minority comprising mainly of a North American alliance of companies. The EC had its concerns as well. ETSI adopted a revised IPR policy that adhered to FRAND, because RAND already existed in the US without being defined, and was also in line with the EC’s expectations, alleviating ETSI from these tensions and legitimacy demands and pressures from within and outside the organization.

ETSI’s IPR policy is a resource for the Institute, which supports the organization in mitigating risks of disruptions and can, therefore, be said to drive resilience for the organization. Because this IPR policy has been wrongly used, as it was not designed to be a licensing tool but solely an information tool for the parties, it has continued to be a source of criticism and tension over the years. To the extent that IPR is a “simmering” issue that can surface at any time, ETSI may be said to experience a “lingering” crisis. ETSI by not further specifying the meaning of FRAND, which is consensual and not defined, has been able to contain it.

The meaning and application of FRAND and related issues have been the subject of disputes and discussions located elsewhere, most notably in the courts of different national jurisdictions (Pocknell and Djavaherian 2023, 981). These disputes have often ended in a settlement, and their outcomes have not affected the organization. It should also be noted that disputes concerning the essentiality of patents, or the T&Cs of FRAND licences represent only a small proportion of the total number of licences signed between patent owners and implementers. We can also legitimately consider that if ETSI's IPR policy had been so problematic, the successful development would not have been possible.

A large part of the actors in the standard development process considers that the ETSI IPR policy fulfils its role well and allows the market to regulate itself in the vast majority of cases for the simple reason that as mentioned above the policy is crafted by taking into consideration that the declared SEPs are only for information. The ETSI database and herewith the licensing commitment was conceived solely as an information tool and certainly not as a licensing tool. This is still the case today hence the refusal of defining FRAND. ETSI’s database is probably one of the most complete sources of information for the industry, being SMEs or multinational groups. Improvements, regarding accuracy, have taken place during the last decade.

The ETSI IPR policy has been important and a stabilizing element within ETSI’s system. The language and licensing activity is no longer on a patent-by-patent basis but on a portfolio basis. ETSI not having changed its IPR policy, at least not in-depth since its adoption in 1994 and having adhered to the rule to not further define FRAND despite pressures and criticism, attests to the resilience of this policy and ETSI.

5. The EU Standardization Strategy

As discussed in the articles by Egan, and Delimatsis and Verghese, the recent EU Standardization Strategy describes an emerging geopolitical landscape that calls for a more bottom-up approach to how the ESOs are designed and governed out of the fear that undue influence by third countries may jeopardize the EU’s values and fail to satisfy EU consumer preferences. The agenda driving this Strategy has not only an economic and political dimension, as Egan notes, where competition over technologies and standards has become more intense with concerns about a “Beijing” effect, it is more normative and value-laden too, raising the question of whether standards bodies are equipped to meet expectations.

The impact of geopolitics on the way standard bodies operate is generally understood, and most adapt to this, by ETSI in particular. Any attempt to instrumentalize standardization for (geo-)political reasons may backfire, however, leading to a race to the bottom. By trying to bring ETSI's governance closer to that of CEN-CENELEC, this Strategy risks undermining the attractiveness of open European ICT standardization, a key ingredient of its very succes in ICT matters. Even if globalization in general and therewith standardization is called into question, any political attempt to favor certain stakeholders in a top-down manner will inevitably diminish the appetite for more innovation by those negatively affected and thereby reduce the EU capacity in the long-run to enthuse and coordinate all the actors of the ICT ecosystem.

Furthermore, the new policy seemingly fails to realize that a fragmented landscape in the field of ICT standardization may, in fact, be beneficial for other parts of the world, thereby intensifying the competition that ETSI is already facing in its attempt to remain the leading place for global ICT standard-setting. Europe is today a global standards maker, in a way somwhat disproportionate to the size of its industry. Most of the technologies and tech leaders, who also own a lot of patents, come from the US and China. And to quote Werner von Siemens ‘He who owns the standards owns the market'.

6. Conclusion

Despite its imperfections and potential procedural hiccups, the EU standardization system remains well-functioning, generally speaking. Although constant monitoring and potential adjustments are needed, as is the case for any living system that evolves dynamically, the ESO system and its expression in ETSI have given and continue to give to the EU some of its most high-profile success stories in many areas.

ETSI’s unique institutional set-up and openness, also to innovation and technologies from outside the EU, is a key trait that contributes to ETSI’s global outreach, acceptance by the relevant stakeholders and institutional success. ETSI being of intrinsic value to many, as illustrated by Delimatsis and Verghese (2024), the organization has relied on a strategy of contestation, using communication to convince the EC that changes to its organization are not needed. Whilst having grown incrementally since its creation, ETSI' institutional set-up has not changed at its core.

ETSI’s flexibility and its bottom-up standard-setting approach and capabilities, being able to deliver standards quickly while ensuring their quality, integrity and (global) relevance is another important attribute of ETSI. It has enabled ETSI to enter new domains of standard setting in response to evolutions in technology, needs and circumstances (including new competitive conditions), and by doing so, ensure its continued relevance. Successes in standard development have led European institutions and the EC in particular to gradually have confidence in ETSI’s governance and standard-setting activities, as well.

The ETSI IPR policy has been important, and both a stabilizing element and a source of tension. As technologies become increasingly complex, new IPR-policy-related issues arise. As noted by Egan (2024), ETSI’s expanding its portfolio has not been without controversy, “due to the balance between accessing standards and granting SSOs proprietary rights over their creations, between monetizing patents and building new technologies on existing standards.” ETSI's persistance in not changing its IPR policy by further defining FRAND has shielded the organization from risks of disputes within its membership de-stabilizing its system.

The technological revolution within the ICT sector during the 30 years shows the need to have robust and open standardization processes that have shown their efficiency. Standards made in Europe help build the Single Market and EU competitiveness, but this cannot happen in isolation. The Single Market will be stronger and more relevant both internally and in the global scene only if it stays open to innovation and technologies from outside the EU. ETSI is an example for the future.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the European Research Council: [grant number ERC-2016- CoG 725798 - REVEAL].