Europe falls further behind US and Asia in 5G rollout
About 1 in 4 Europeans can connect to a 5G network compared to 76% of Americans
Europe has rapidly fallen behind the US and Asia in the race to build 5G networks despite increased investment by the region’s largest players.
The number of Europeans able to connect to a 5G network was 24 per cent at the end of September compared to 13 per cent at the end of 2019, according to new research.
However, that pales in comparison with the 76 per cent of Americans able to connect to 5G and even higher rates in some parts of Asia, such as South Korea where it is 93 per cent, according to a report by telecoms trade body ETNO and research company Analysys Mason.
Europe’s poor performance will add to concerns about the economic impact of the slow pace of network upgrades compared to other regions. 5G networks are deemed to be critical national infrastructure by most governments and key in modernising factory floors, transport systems and healthcare.
The European Commission has said repeatedly over the past decade that the continent will play a leading role in the 5G era, going as far as to launch multiple ‘action plans’ aimed at stimulating investment, but progress has stalled.
Groups including Deutsche Telekom, Vodafone, BT, Telefónica and Telecom Italia have all launched 5G and upgraded more fixed networks to fibreoptic cables to support the rollout and the ETNO report shows that the pace of investment by the sector is rising, with almost €52bn spent in 2019 compared to €48.6bn the previous year.
However, the average investment per capita in new networks remains lower than in other regions at €94.8 compared to €147.9 in the US and €233 in Japan.
The industry has long argued that heavy-handed and inconsistent regulations have stymied progress across the fragmented European market, causing lower returns on investment and putting a brake on investing the billions of euros needed to upgrade networks to 5G.
“European (telecoms companies) invest more than in the past, but this does not suffice to bridge the gap. We need strong policy action for massive network rollout and uptake,” said Lise Fuhr, director-general of ETNO.
European companies are spending a larger share of their revenue on network upgrades than in other regions. However, monthly average mobile revenue per user in the region was less than €15 compared to €23.7 in the South Korea and €28.1 in Japan and €36.9 in the US, according to the report, which has a detrimental effect on investment the sector says.
5G has yet to emerge as a must-have consumer technology but is regarded as an economic driver for a variety of industries. Europe’s leading industrialists have warned that there is an urgent need to close the growing gap with the US and Asia and that a failure to co-ordinate the rollout across the region could leave supply chains uncompetitive and lead to declining investment.
Freeing up spectrum — the frequencies used to deliver wireless data — is key to that process. Only one country — Finland — has auctioned all of the necessary spectrum bands for 5G while a dozen countries, including Belgium, Poland and Portugal, have not completed any auctions at all.
So far €21.6bn has been raised in Europe’s 5G auctions but the staggered approach across different countries is in marked contrast to markets such as the US where the regulator has made the sale of huge amounts of spectrum an imperative.
“The EU has shifted to a pro-investment policy approach, but this is slow to translate into concrete help at the national level,” Ms Fuhr said.