Ericsson, Nokia & Vodafone: Survival of the EU telecom sector at risk

"This is a crucial moment for Europe to ensure its competitiveness and success in the digital economy." With this sentence, Marc Vancoppenolle, Andrew Lloyd and Ben Wreschner, the lobby bosses of Nokia, Ericsson and Vodafone, launch a kind of plea for help to EU politicians. Their plea: enormous investments in the expansion of high-speed networks are still needed in Europe. To be able to cope with this, the industry urgently needs more regulatory freedom and a harmonized EU internal communications market. Otherwise, it would be on the brink of extinction.

"Meeting Europe’s ambitious connectivity targets for 2030 – all households covered by a fixed gigabit network and all populated areas covered by 5G – depends on continuous investment from telecoms operators", the trio writes in the online magazine Politico. At the same time, network operators would have to take part in frequency auctions, some of which only end at hundreds of millions of euros. These expenses are often exacerbated by short license terms.

According to the representatives of the equipment suppliers and the network operator, these factors, combined with "rising costs, inflation, interest rate hikes and the pressure to maintain low prices, have created an ominous storm "that threatens the long-term viability of the telecommunications sector". At the same time, this would "jeopardize Europe's own digital ambitions". For the authors, it is therefore clear: "Something has to change."

Deregulation and debureaucratization desired

One of their proposals: According to them, the entire digital ecosystem would benefit from a "modernization of regulation". Reducing the administrative burden and focusing on fewer, more flexible and simpler regulations seemed to be "the right ingredients if Europe wants to be ready for the next innovation cycle".

The Digital Networks Act (DNA) planned by the previous EU Internal Market Commissioner Thierry Breton could also play a key role in the survival of the sector, the lobbyists emphasize. This is intended to harmonize the allocation of radio frequencies, for example. It should also enable the industry to focus on the next generation of telecommunications markets, in which software-based solutions with cloud and edge computing are likely to set the tone. Breton wants to reduce dependencies on Chinese equipment suppliers.

In other respects, the three networkers also recognize "the first signs that political decision-makers are moving in the right direction". For example, they welcome the report by former Italian Prime Minister Enrico Letta on the internal market, according to which "size" is crucial, especially for telcos. Germany and France also want to enable "European champions" in this sense, particularly in the mobile telephony sector, but this offends cartel watchdogs and consumer protectors.

EU citizens' right to a digital future

The Federal Network Agency is also currently discussing proposals to extend frequency licenses for a further five years, the authors praise. In return, the operators would have to undertake to meet certain coverage obligations and provide 99% of rural households with high-speed internet by 2030. However, the initiative is controversial, as the newcomer 1&1 could miss out.

Remarkably not on the wish list: Big Tech cost-sharing for network expansion, as Telekom, Vodafone & Co. are otherwise constantly calling for.

(vat)