Europe is lagging behind other regions on many disruptive technologies that will shape the future.
By 2025, 50% of the total global 5G connections will be in the Asia-Pacific (APAC) region and the United States (US). In the case of Europe (EU), the figure is 30%[1]. In the race for global high tech supremacy, EU remains behind other regions as the region’s plans for digital sovereignty are still vague and dilatory.
In the EU, the implementation of digital sovereignty will impose stricter rules against foreign technology companies but aims to boost local innovation. Similarly, the EU‘s ‘5G Toolbox’ risk mitigation framework recommends that EU member states establish plans to phase out high-risk suppliers. On top of that, technologies such as artificial intelligence are not yet regulated by the EU governing bodies, thus causing concern over security and privacy. Other main concerns of mobile operators at a regulatory level include the lack of and high price of the spectrum and excessive coverage requirements of spectrum tenders. All of these regional initiatives and developments suggest a significant lack of clarity on regulations in the EU and this is impeding the progress of 5G in the region. In comparison, most countries within the APAC region have received strong government intervention and investment to accelerate the deployment of 5G. For example, in South Korea, there had been many attempts by the government to push for 5G with the most recent being the launch of a task force that will facilitate the expansion of 5G coverage into rural areas. Strong collaboration between local government and industry players has played a key role in enabling successful deployments of 5G in APAC.
Additionally, in both the EU and APAC region, the market is highly fragmented as the regions accommodate a variety of culture, diverse customers demography, different regulations and innovation policies, thus increases bureaucracy and lowers responsiveness of business. To overcome this challenge, in the APAC region, there is a growing sustainable 5G ecosystem and mobile operators in the region are partnering and investing in different areas, including infrastructure sharing. A large number of cross-industry collaborations in the APAC region have resulted in a more cohesive ecosystem for industry, thereby driving the deployments of 5G. For example, with the COVID-19 pandemic accelerating the use of 5G in the healthcare market, AIS, an operator from Thailand launched 5G-enabled robots in hospitals to provide remote care for COVID-19 patients. There is a need for the EU to overcome similar challenges as APAC to achieve better progress with 5G.
The lack of clarity in the EU roadmap for 5G, lack of affordable spectrum and slow pace of spectrum auctions due to the COVID-19 pandemic restricting auctions to online or on-site with precautionary measures in place have also hindered the 5G deployments in EU. Italy and Germany have been criticized for their approaches to 5G spectrum auctioning. This includes reserving airwaves for industrial groups and driving up license fees for the remaining frequencies. The price per MHz per capital for mid-band (3-5 GHz) spectrum in Italy is estimated at US$0.50 (€0.43), which is 10 times higher than countries such as Finland[2]. While high spectrum pricing has been cited in APAC, it is not common. In India, operators have confronted the Telecom Regulatory Authority of India (TRAI) regarding the suggested base price of 5G spectrum. The regulatory body suggested US$66.3 million (Rs 492 crore) per MHz for 5G spectrum[3], which is a price that operators deemed as too high.
The key difference between EU and APAC is that regulators in APAC countries constantly drive spectrum auctions and provide greater transparency and visibility into spectrum planning and regulations. Most APAC regulators take into account the local context. For example, due to mobile operator financial uncertainty, the government in New Zealand decided to take a direct allocation approach, which means that the spectrum was assigned for a set fee. Successful spectrum auctions have enabled leading mobile operators across the APAC region to launch the 5G network in the second half of 2019. As of 2019, 27 EU countries have yet to allocate mid-band spectrum, whereas, in South Korea and China, where 5G deployments are case studies for the world, this spectrum band was already allocated in June 2018 and 2019, respectively. Clear planning to make spectrum available in a timely manner is crucial to enable mobile operators in the EU to plan their investment and activities to get new 5G services to the market promptly.
In terms of infrastructure deployment in the EU, only 10 5G base stations per million capita have been deployed, compared to 1,500 base stations per million capita in South Korea. On top of that, the EU has only enhanced 1% of its 4G base stations to 5G, compared to 99% in South Korea. The lack of infrastructure development is partially due to legacy issues from the delayed roll-out of 4G in many countries across the EU region. The share of the subscriptions using 4G networks in EU is 70% as of 2019, significantly lower than in China and South Korea, where it reached around 90%.[4] This difference further adds a step for EU before it can advance to 5G.
To make matters worse for the EU, the prospect of the adverse effect of wireless radiation on the human body has raised concerns and fears about 5G technology. There are reports of individuals that claim to suffer from electro-hypersensitivity to have a variety of health issues that are related to electromagnetic frequencies, such as mobile phone signals. For example, in Switzerland, 90% of the country is covered by standard 5G, an enhanced 4G network, and approximately 10% of the population are electro-hypersensitive. This has led to protests and restrictions that have hampered the rollout of the real 5G network in the country. In APAC, government agencies have been more prompt with addressing these concerns. In Australia, there were public concerns that 5G developments enabled the faster spread of the COVID-19 pandemic, however, the Australian Radiation Protection and Nuclear Safety Agency (ARPANSA) has issued a public advisory and have reassured that 5G and other telecommunications systems do not affect the human immune system.
Based on the European Commission’s 5G Action Plan, it aimed to launch 5G services in all Member States by the end of 2020 and to ensure uninterrupted 5G coverage in urban areas and along main transport path by 2025. However, in 2020, the EU region is still lagging behind the APAC region in both commercialization and infrastructure rollout for 5G. This is due to vague regulations and restrictions, agitated geopolitics, and lack of spectrum availability. Given the impact of COVID-19, 4G will remain the dominant technology for consumers and enterprise in the EU region going into 2021. Further reinforcing this fact is the survey finding in November 2020 that an estimated 61% of consumers in the EU do not plan to upgrade their internet services in 2021. This finding coupled with slow progress with enterprise 5G paints bleak prospects for 5G adoption in the coming year.
The acceleration of the digital transformation due to COVID-19 has brought attention to why the EU will urgently need to invest in 5G rollout. The region has significant industrial strengths that can benefit from 5G deployment in the future. Therefore, there is a need for a more harmonized approach to 5G spectrum and better regulatory incentives for future investments and development in the space to take place. It remains to be seen if 5G will enable the many disruptive technologies that will shape the future of the EU. It seems clear that the inertia preventing progress needs to be reduced for the EU to progress at the same evolutionary pace as APAC.
[1]Garrigues, https://www.garrigues.com/en_GB/garrigues-digital/5g-rollout-runs-problems-europe, accessed on November 5, 2020
[2] ERT, https://ert.eu/wp-content/uploads/2020/09/ERT-Assessment-of-5G-Deployment-Status-in-Europe_September-2020.pdf, accessed on November 5, 2020
[3] The Economic Times, https://economictimes.indiatimes.com/industry/telecom/telecom-news/5g-prices-may-be-cut-to-offer-relief-to-telcos/articleshow/77231032.cms?from=mdr, accessed on November 6, 2020
[4] ERT, https://ert.eu/wp-content/uploads/2020/09/ERT-Assessment-of-5G-Deployment-Status-in-Europe_September-2020.pdf, accessed on November 5, 2020
