Report urges support for greater investment in European networks

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Policy action is needed to boost investment in European telecom networks, according to research commissoned by the European Telecom Network Operators Association (ETNO).

The report, The new State of Digital Communications, carried out by Analysys Mason argues that as telcos roll out 5G and fibre, better “investment conditions” are required.

It finds that 2019 saw the launch of 20 5G networks in nine European countries, with 80 networks expected to be in operation by the end of 2020. 

Network sharing

Network-sharing is identified as a major tool to speed up 5G roll-out, with many European countries having between one and three agreements in place already.

Fibre roll-out is increasing across the region, with FTTP reaching 41 million households in 2019, up from 34 the previous year.

The total investment in European telecom networks reached €48.6 billion a year, the report finds, with European telcos calculated to have the highest proportion of revenues dedicated to investment (capital intensity).

However, it also notes that European telecom markets remain weaker than global peers, with European investment per capita at €89 per person, compared to €213 in the US or €191 in Japan. According to ETNO, this is driven by factors such as weaker demand, market fragmentation and lower prices.

“European alternative” opportunity

The report identifies areas in which telecoms have an opportunity to offer a “European alternative” to consumers, including in the field of trusted AI, cloud and data-based services. Projections also indicate further growth in the area of IoT, with 740 million active IoT connections in Europe by 2026.

Similarly, by 2024, telecom revenues from OTT video services are expected to expand to €5.5 billion per year, up from €1.8 billion today.

Lise Fuhr, ETNO Director General, said, “ETNO shares [European Commission] President von der Leyen’s ambition to make Europe a global digital leader. This report shows that there is a strong case for supporting investment in 5G and fibre, and for creating more space for EU innovation in AI and data.”

The report also calls for “pro-investment” regulation, including in the application of the European Electronic Communications Code (EECC) to boost fibre roll-out, as well as action on spectrum auctions to avoid “punitive costs”.

Fit for purpose

Rupert Wood, Research Director, Analysys Mason, said, “Fit-for-purpose digital infrastructure could deliver significant economic, societal and environmental benefits for Europeans.

"However, investment per capita in fibre and 5G is being held back. We observe that, by global standards, European telecoms investment and telecoms-specific taxation is high in relation to revenue, but the prices consumers pay are ultra-low”.