There are growing concerns in Europe that if the regulatory environment doesn’t change, the continent will be left behind in relation to the commercialization and subsequent deployment of 5G networks. That was the general consensus which was shared amongst a number of high-profile and prominent figures from the ICT industry during Mobile World Congress in Barcelona.
The US and countries in East Asia such as China, Japan and South Korea are already establishing a strong market position in relation to the development of next generation technologies.
The Middle East has also adopted an aggressive and ambitious approach to 5G, with many of its major operators such as Etisalat in the UAE, and Saudi Telecom Company in Saudi Arabia already agreeing to enter into commercial 5G contracts with European telecommunications vendor Ericsson.
Ericsson CEO Borje Ekholm took the opportunity during his keynote presentation at Mobile World Congress to take aim at the current ICT climate in Europe, and expressed his fears that the continent is going to repeat the same mistake as it did with 4G.
However, according to Ericsson’s CEO, when you consider the revolutionary benefits and lucrative opportunities that are being promised with the advent of 5G technology, any hesitation in terms of creating the correct framework and ecosystem in Europe for 5G would have a significantly greater economic impact than the same hesitation did with 4G.
Ekholm was addressing some concerns that were expressed from many European operators that a blanket ban on Chinese telecommunications behemoth Huawei would significantly hamper their ability to commercially deploy 5G networks.
Although Ericsson’s CEO didn’t directly name Huawei, it was clear he was referring to it when he was dismissing the fears that had been expressed from operators and stated that they already have access in Europe to 5G technology. He stressed that the biggest challenge facing operators wasn’t access to 5G technologies, but instead the combination of high-spectrum prices and heavy regulation.
Ekholm said, “There has been a lot of discussions and conversations taking place in Europe recently regarding the security of networks. This is a very important topic because 5G is going to become a national infrastructure so the security of 5G networks naturally enough will be absolutely critical. 5G will be the backbone in the future of our society.
However, operators shouldn’t be concerned that they’re going to fall behind in 5G deployments because they already have access to 5G technology. Undoubtedly, the biggest challenges facing operators is the combination of high-spectrum prices and heavy regulation. These barriers need to be removed in order to foster an environment which is more investor friendly. If operators can’t invest properly in 5G then the continent will fall behind, and that will have a severe effect on its economy.”
Market fragmentation
Chafic Traboulsi, vice president and head of Networks at Ericsson MEA, also conceded that high spectrum prices and heavy regulation were huge stumbling blocks in Europe’s ability to deploy 5G networks, but also pointed to fragmentation in the market as a huge obstacle.
Traboulsi told Telecom Review, “Regulators are there for the people at the end of the day to make sure the business and competition is fair. However, it’s become very evident that there needs to be a balance - and Europe needs to move quickly. They need to ensure that they secure frequencies at a very affordable rate for the communication service providers so that they can give those advanced services to their customers.”
The Ericsson executive added that the cost of spectrum in Europe was just far too high.
“Operators in such a competitive industry as Europe just simply don’t have the additional CAPEX to spend on buying high spectrum. As I said, the regulators are there to protect consumers but at the end of the day, there are far too many operators in the same markets. That market fragmentation restricts investment and results in operators not being able to invest properly. We were working with one operator in Romania, and there were eight other operators in the market. It’s just not sustainable.”
CEO of Telefonica, Jose Maria Alvarez Pallete, urged European governments to resist the temptation to artificially inflate spectrum pricing in an effort to accelerate the rollout of 5G mobile networks. According to Pallete, European telecoms regulators need to adopt a more pragmatic approach to market consolidation in a bid to help telecommunications operators bare the cost of 5G rollout.
During his opening address at MWC 2019 in Barcelona, the charismatic CEO questioned whether the European Commission’s preference for four players in each of the markets it regulates was in the industry’s best interest, particularly as it looks to pump billions of euros into its 5G network rollout.
“Does competition theory say that Europe needs one mobile operator for every 1 million citizens in Europe? Governments are using 5G auctions as short-term cash generators rather than fostering the digital transformation that societies and economies require. Spectrum needs to be awarded for longer durations, and we hope that the new commission and parliament in the European Union make the creation of a level playing field their number one priority.”
Nokia’s CEO Rajeev Suri also expressed his expert view on 5G progression in Europe, and was wholly unequivocal in his assessment that Europe’s 5G implementation program will be undoubtedly delayed. He shared the sentiments expressed by his Ericsson counterparts and pointed to a combination of high spectrum prices and regulatory hurdles as the main factors preventing Europe from the leading the way on the commercial deployment of 5G networks.
Suri suggested that Europe's execution of the new technology destined to fundamentally reshape major industries and our society as a whole would lag behind peers like the United States and China, which are making major strides in their development of 5G.
Suri said, “The main reason European telecommunications players are falling is a lack of spectrum as well as many regulatory hurdles. Spectrum is available in some countries, not all, and the market was completely ‘overregulated’ and that consolidation is not permitted."
There was no better example in Europe to exemplify the issue of high spectrum than in Italy, with the Italian government hauling a record $7.6 billion in a spectrum auction it held in October.
Whether or not European regulators heed the calls from the continent’s major operators and telecommunication vendors remain to be seen, but one thing is for sure, if they don’t move fast then they will definitely be left behind the rest of the world in terms of deploying 5G networks.
