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Connectivity can steer Europe back to competitiveness

1 Feb 2024Public Policy news
4 minute read

BY JOAKIM REITER, CHIEF EXTERNAL AND CORPORATE AFFAIRS OFFICER, VODAFONE

Joakim Reiter

This article was first published in Politico on 01 February 2024

In 2023, Boston Scientific adopted a 5G-connected service that allows cardiologists to interact with holographic replicas of a patient’s heart through augmented reality (AR). As well as creating the perfect environment for training new surgeons, 5G AR can also play a role in supporting live operations. This is just one example of the potential use cases for next generation connectivity.

Meanwhile, in China, Unicom Guangdong is already combining 5G with multi-access edge computing (MEC) to deliver low-latency, high-bandwidth connectivity for manufacturing businesses. Today, this is supporting more than 1,000 SMEs in the city of Foshan. As a result, most have seen increased productivity and equipment effectiveness, while reducing their waste and lowering costs.

Vodafone collaborates with businesses across Europe to explore how 5G-connected technologies can help improve lives and drive growth. What’s clear is that for any of these technologies to be deployed at scale – as they are already in China and the US – Europe will need widespread 5G connectivity. And there lies the challenge.

Product of a poor investment climate

Although the Commission reports 5G coverage of more than 80%, Europe remains some way off achieving its 5G connectivity targets for the decade. The deployment of 5G Standalone (5GSA) – ‘real 5G’ where advanced equipment is used in the network core as well as the antennas – is significantly behind.

Independent research has shown how poor the situation really is. Worldwide, no European country makes the top 10 for 5G availability. A chasm is opening between Europe and competing regions like China and the US. We risk a future where EU citizens and businesses are missing out on opportunities to access emerging technologies and digital services, simply because of where they are based.

The underlying challenge is a lack of private investment available for 5GSA infrastructure – a multi-billion-Euro funding gap driven by the poor investment climate for digital in Europe. Leading European CEOs sounded the alarm in a recent research report for the European Roundtable for Industry (ERT). More than 80% of them saw Europe’s competitiveness as weakening, blaming factors including the complex regulatory environment, competing industrial policies between EU countries, and exposure to geopolitical tensions. Investor confidence in Europe remains low, evidenced by the steep decline in inbound foreign direct investment since 2018/19.

Regaining Europe’s competitiveness should be a critical priority for the EU and Member State governments. Boosting productivity – the efficiency with which goods and services are produced in our economy – has to be the core focus. EU leaders and policymakers have a critical opportunity in front of them to catalyse productivity and growth through digitalisation.

Connectivity can be the course corrector

In the mid-nineties, a surge in computer hardware production and demand for related services – often dubbed ‘the ICT revolution’ – was one of the main contributors to a productivity jump in Europe, and even more so in the US.

Europe is now on the cusp of the next major productivity boost. It will be driven by next-generation connectivity – namely 5GSA – and the digital transformation it enables for businesses.

In manufacturing, where Europe is already a leader, the potential impact of digitalisation globally is estimated to reach up to $2 trillion each year. Just as 4G unlocked the mobile internet for consumers, 5GSA will unlock the industrial internet, transforming machine-to-machine communication and enabling the Industrial Internet of Things to progress from fantasy to reality.

While larger manufacturers are likely to continue building mobile private 5G networks and bespoke in-factory solutions, smaller businesses will need to rely on publicly available 5GSA to access similar opportunities for innovation.

For farmers and rural citizens, next-generation connectivity will have a crucial role to play in improving crop yields, supporting sustainability, and increasing opportunities for remote or flexible working in jobs traditionally limited to those living in cities.

Why Telecoms Matters

For healthcare, connectivity can deliver immediate returns for patients through telemedicine and remote services, while enabling newer applications – like 5G AR training for new cardiologists – to be offered at scale.

There is still everything to play for

The true impact of digitalisation for our economies and societies will be determined by the speed of its adoption. We are talking about a €1 trillion opportunity for Europe, but this largely depends on the success of the industrial internet – machines integrating with smart sensors, software, AI and the cloud, all enabled by the speed and low-latency capabilities of 5GSA.

While mobile operators are expected to invest heavily to build 5G networks of the future, Europe is still falling behind. Only through regulatory change can we move into a situation where the necessary investment can be attracted, enabling operators to roll 5GSA out at pace. Perhaps Commissioner Breton’s upcoming white paper, anticipated later this month, could be the compass needed to guide such a course correction.

Until then, a new report from Vodafone examines the role that next-generation connectivity – and the digital goods, services, and applications it enables – can play in improving European competitiveness.

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