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Paving the way for the future of connectivity

3 Apr 2023Public Policy news
4 minute read

Joakim Reiter, Chief External and Corporate Affairs Officer, Vodafone

Mark Twain is often quoted as saying history does not repeat itself, but it often rhymes. We should listen to the past to avoid the repetition of missteps and errors.

As I watch the current debate about how Europe could and should fund the future of connectivity, I fear we would do well to heed the advice of Mark Twain.

Europe has been slow in rolling out crucial digital infrastructure before — like in the 2010s when access to basic broadband dragged behind other regions. Today, it dawdles in the rollout of 5G, a critical driver of manufacturing competitiveness, prosperity, and economic wellbeing.

We urgently need to upgrade our mobile networks to gigabit speed and expand access to connectivity in rural and hard-to-reach communities. We need 5G if we want to compete with America and China and offer European consumer and businesses the same opportunities.

The European Commission now recognises the need for a new approach. It is right to ask the tough questions. How can we move forward? Where do we need to change course to pave the way for the future of connectivity that Europe needs, but has so far failed to achieve?

It is time to rethink regulation. It is time to leave well-trodden paths and do things differently.

Our sector is paralysed by outdated policies that have not evolved with the market realities they were created for, and do not incentivise investment as much as they should. In addition, the telecom single market is a patchwork of 27 separate national markets with different rules and practices. Just take the example of spectrum. To build the ultra-fast networks for tomorrow's connected world, we need enough spectrum at affordable prices. But today, member states decide on spectrum auctioning and allocation on their own. A more harmonised pro-investment approach across the EU would be better to ensure fast and efficient 5G networks for all EU citizens.

There are currently around 100 mobile network operators in Europe – most of which are not at scale, especially compared to the U.S. and China, where there are only three major mobile network operators each.

To its credit, in its public consultation, the European Commission examines obstacles to cross-border services and consolidation in telecoms. This is a good step forward, but scale is urgently needed now – not in 5, 10 or 15 years. Consolidation will help achieve scale required to strengthen our businesses against growing financial headwinds and global competition. It is about ensuring both in-country and cross-country industrial scale, not either or, or – worse – keeping one hostage to the other. In addition, the barriers to greater cooperation between providers must be removed.

Europe wants all citizens in the EU to benefit from gigabit speed networks or 5G by 2030. This will require hundreds of billions of euros in new investment.

We need a level playing field in the Internet ecosystem, where the handful of largest traffic generators – sometimes called over-the-tops or OTTs – responsible for more than 50 percent of traffic, contribute to the infrastructure they need to bring their data-hungry services to customers.

Digital traffic flows have increased by 600% in just seven years. Average data traffic in Europe doubled from 2021 to 2023 alone.

The development of new services like VR, AI and the Metaverse will fuel further data demands on our digital networks.

Telecom companies like Vodafone have shouldered the vast majority of the bill for network investment alone. European Telcos invested 500 billion euros in private capital over the past 10 years, even as the financial situation of the EU telecom sector has steadily weakened.

At the same time, the investment gap to reach the EU’s 2030 connectivity targets is huge. An estimated 300 billion euros are needed just to upgrade fixed infrastructure and to fully deploy 5G, which is more costly than 4G.

To be clear, telecom operators are all ready to continue to invest heavily in networks, and it is fair to acknowledge that the big tech companies also invest – in submarine cables and data centres, just as many operators do. The problem is that telecom companies are investing much, much more. And yet it is not enough for what Europe needs – a painful reality that will not go away by ignoring it.

We support the European Institution’s Digital Declaration, which stated that, “all market actors benefiting from the digital transformation,” should make, “a fair and proportionate contribution to the costs of public goods, services and infrastructures, for the benefit of all Europeans.”

The difficult question is not whether we do that, but how? The answer lies in cross-industry collaboration.

Network operators, OTTs, governments, and the European institutions should have a shared interest to find a solution together, that benefits customers. We welcome the ongoing public consultation and are hopeful this will lay the foundation for a more fact-based discussions and a fairer approach.

A progressive EU digital vision, learning from the rhymes of history, can unlock investment in 5G for Europe, giving European customers the digital opportunities they deserve. The EU requires a much stronger and ambitious plan now to connect to compete.

This article was first published by Euractiv on Monday 03 April.

  • 5G
  • AR / VR
  • Connectivity
  • Consumers
  • Digital Society
  • EU
  • Europe
  • Everyone.connected
  • Future of Connectivity
  • Infrastructure
  • Innovation
  • Networks
  • Partnerships
  • Policy
  • Public Policy
  • SDG 9
  • SDGs
  • Social Contract
  • Viewpoint

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