Connect Europe presented the 2026 edition of its report State of Digital Communications , which provides an overview of the European telecommunications sector and analyses the trends that shape its competitiveness. The document reinforces an idea that is increasingly shared within the industry: the question is no longer whether Europe has technological capacity, but whether it has a coherent regulatory framework that allows it to transform this capacity into a competitive advantage.
This reflection is particularly relevant in a context of growing demand for technological sovereignty in Europe and at a key moment, with the revision of the Merger Guidelines, the future Digital Networks Act and the regulatory simplification ongoing. These reforms could redefine the sector’s competitive and investment framework and strengthen Europe’s ability to develop, protect and scale its own technologies.
A strategic sector for European technological sovereignty
The report identifies two major trends that highlight the increasingly strategic role of telecommunications in the European technological sovereignty project.
The first is the consolidation of the European digital communications ecosystem as a pillar of the economy: in 2024, it reached a value of €1.09 trillion, equivalent to 5% of GDP. These infrastructures underpin the entire economy. Industry, banking, commerce, healthcare, education and defence all depend on reliable, high-capacity networks. Without them, there can be no artificial intelligence, industrial automation or data economy. In other words, European technological sovereignty begins with its networks.
The second trend points to the transformation of the sector itself. European operators are evolving from their traditional role to integrated and interoperable technology platforms, expanding their role in the technological ecosystem, as with the Euro 3C . Cybersecurity, cloud services, edge computing, telco-edge-cloud , AI solutions, satellite direct-to-device services and API programmable network are part of an increasingly sophisticated offering that turns networks and operators into a driver of innovation and advanced services. In other words, the sector is strengthening Europe’s ability to develop and scale its own services and technology.
Persistent challenges threatening European ambition
Despite its strategic importance for technological sovereignty, the European telecom sector faces challenges that could limit its competitiveness and investment capacity.
1. Gap in network coverage, adoption and performance
According to Connect Europe, Europe lags significantly behind global leaders in coverage, speed and adoption of new technologies. In 2025, 5G coverage reached 94.9% of the population, below the US (98.4%), South Korea and Japan (99.9%) and China (96%). In 5G standalone (5G SA), the most advanced form of 5G coverage, the difference is even more pronounced: 63% of the population covered in Europe compared to 93% in China, 81% in the US and 75% in Japan, while only 43% of European mobile connections are 5G, compared to 73.4% in the US and 70.4% in China.
This gap persists despite considerable investment. European operators have paid more than €8 billion annually for licences over the last five years and more than €30 billion for 5G spectrum licences, totalling almost €50 billion in auctions since 2020.
In fixed networks, by 2025, 77.2% of households will be covered by FTTH and 86.2% by gigabit-capable networks, but the average performance of these networks remains below global leaders in terms of download speed: 171 Mbit/s in Europe, compared to 289 Mbit/s in the US, 206 Mbit/s in China, 219 Mbit/s in Japan and 234 Mbit/s in South Korea.
2. Sustaining investment in a challenging financial environment
The second major challenge is investment. Despite technological demands, European operators are operating in a context of limited revenues. In 2024, investment in the sector fell by 2% to €64.6 billion, remaining below previous years. An alarming fact highlighted in the report is that, given the lack of greater investment capacity, an estimated 41.8 million Europeans will still not have access to FTTH networks in 2030.
The gap is even more evident in per capita terms: Europe invests €118 per inhabitant, well below the US (€217), Japan (€173) or South Korea (€151). Furthermore, GDP-adjusted ARPU (average revenue per user) remains stagnant, even below levels seen a decade ago. In 2024, mobile ARPU was €14.9 (-2.4% vs. 2023), compared to €26.1 in the US, €21.7 in South Korea, €21.3 in Japan and €18.3 in China.
3. Market fragmentation
The third challenge, which is more structural in nature, is the high fragmentation of the European market. According to Connect Europe, in the mobile sector, Europe has 44 operators with more than half a million subscribers, compared to only 8 in the US, 4 in China and Japan, and 3 in South Korea. In fixed networks (FTTH), the number also exceeds that of other regions: more than 70 operators with more than 500,000 properties connected to fibre, compared to 28 in the US, 6 in Japan, 5 in South Korea and 4 in China.
4. Adapting to technological evolution and convergence
Another challenge points to the unstoppable technological evolution towards convergence between technologies, providers and services. European operators are going beyond connectivity and expanding into the cloud to meet the growing demand for digital services. By 2025, they controlled 19% of European data centres (≈600 out of 3,177) and had deployed some 750 edge cloud nodes by the end of 2024.
Similarly, the report confirms an unstoppable trend that will increase pressure to accelerate the sector’s adaptation: data traffic continues to grow, reaching 1,104 exabytes on fixed networks in 2025 (vs. 989 in 2024) and 169 exabytes on mobile networks (vs. 149 in 2024). AI is expected to further drive this growth, with data centre interconnection traffic potentially increasing by up to 50% annually between 2025 and 2030, according to Connect Europe.
Pro-technology regulation for a more competitive and sovereign Europe
Europe has advanced networks, operators with global experience and a sophisticated digital market. The challenge is to leverage this foundation to drive growth and innovation. The sector fitness check highlights the need for pro-technology regulatory frameworks that encourage the scaling up of operators, which is key to strengthening their investment and strategic capacity in a context of growing demand for digital sovereignty.
The Digital Networks Act, the revision of the Merger Guidelines and the regulatory simplification, which should be more ambitious than that presented in the Digital Omnibus (including the withdrawal of the obsolete ePrivacy), could open the door to a Europe that is committed to transforming its infrastructure into cutting-edge technology platforms, strengthening Europe’s ability to scale its own technologies and boost its competitiveness.
