The impact of telecommunications transformation on innovation

Public policies in the European Single Market should be inspired by the pursuit of innovation and global competitiveness. European technology companies would benefit from an environment conducive to investment, transformation, and innovation.

The transformative power of telecommunications and its impact on innovation
Juan Montero

Juan Montero Rodil

Reading time: 5 min

The European Union faces the challenge of strengthening the competitiveness and strategic autonomy of its companies in a complex geopolitical, economic, and technological context.

In 2024, the European Commission will start a new cycle with the firm intention of consolidating a strong, economically competitive and environmentally sustainable Single Market.

Innovation: the basis for transforming Europe’s competitiveness

The Single Market, originally conceived as a barrier-free space for the movement of goods, services, capital and citizens between Member States, is the cornerstone of the EU’s industrial strategy. To move forward, barriers to business investment need to be removed by simplifying rules and, where necessary, improving their application.

This is crucial because without investment there is no innovation and therefore no improvement in competitiveness. It is imperative that the EU fosters a favourable environment for European companies, especially technology companies, to grow, transform and innovate.

These companies are essential for strengthening the economic structure and enriching the European social fabric, through sustainable technological advances accessible to all, in a context where the digital economy plays a crucial role in boosting competitiveness and global leadership.

The innovative nature of the telecommunications sector

The telecommunications sector, key in this context, has undergone a constant process of innovation in its recent history, adapting and anticipating the needs of European businesses and citizens in a constantly changing digital environment.

The sector has undergone a major transformation. From operating and competing on differentiated networks (fixed, mobile, cable or satellite), to converging networks and services, expanding offerings, adding global competitors, and embracing emerging technologies. This evolution has only been possible thanks to profound and continuous innovation in its processes, systems, commercial strategies and, above all, by the technological evolution of the networks that provide connectivity, fixed and mobile, the central axis on which the competitiveness of the digital economy is based.  

Significant industry investment, estimated by ETNO at an average of around EUR 50 billion per year over the last decade, has enabled the transition from copper (PSTN) and 2G mobile networks to next-generation networks such as fibre-to-the-home (FTTH) and 5G. This commitment to innovation has enabled the modernisation and adaptation of network capabilities to meet the growing demand for broadband-intensive digital services. But it has also enabled the development of improved products and services and opened up new opportunities for technological innovation in multiple sectors.

Industry’s vision: re-transforming the network to drive a new generation of digital services

Innovation in the telecommunications sector cannot stand still, just as the needs of European citizens and businesses continue to evolve.

Digital services based on technologies such as 5G, IoT, web3, edge-cloud computing or Artificial Intelligence will create completely new and unknown economic opportunities. To reach their full potential, enhanced network capabilities, such as increased data processing power or different levels of latency, are required.

The industry’s vision is a major network revolution, similar to the one that smartphones once brought: transforming them into programmable networks and creating an open innovation ecosystem around them, by opening the network’s capabilities to interested developers.

As with the introduction of the smartphone, this network revolution would increase the pace of digital innovation, accelerate the spread and adoption of these solutions, and boost the competitiveness of Europe’s telecoms sector in the digital domain. 

Open Gateway: the innovation platform for the digital services of the future

Open Gateway is the telecommunications industry’s project to make it easier for developers to integrate network capabilities into their digital solutions through global, standardised APIs (Application Programmer Interface).

The industry, led by the GSMA, is working to standardise access to these capabilities to promote compatibility of a single development across operators’ networks. This cooperation is essential to drive the scale of innovation, as well as to drive a broad spectrum of value propositions for developers, start-ups, application providers, and users.

Open Gateway therefore enables an open innovation platform on networks for any digital innovation idea to multiply its possibilities and reach. At the same time, it promotes the optimal development of the digital services of the future through an efficient allocation of network resources, resulting in greater benefits for society.

Recommendations for the promotion of innovation in the telecommunications sector

There are currently three key areas where operators believe investment is needed to consolidate an open innovation platform: edge computing for efficient processing close to users; low latency technologies such as 5G and fibre; and programmable networks through global, standardised APIs.

To this end, it is necessary to recognise the strategic role of the telecommunications and connectivity sector in driving innovation and competitiveness. The European Union needs to promote public policies that improve the investment climate in the sector. This includes the promotion of efficient market structures that ensure adequate return on investment; mechanisms that encourage the fair contribution of the digital ecosystem and the efficient allocation of network resources; and recognition of the key role of networks in the green transition. These policies should also be aligned with the objectives of the EU’s industrial strategy, to promote investment and innovation.

The right policies in place will allow to move towards a Single Market and stronger Member States’ economies, underpinned by a competitive telecoms sector that grows, transforms, and innovates for the benefit of European society.


Contact our communication department or requests additional material.

Telefónica Centenary logo Celebrate with us the Telefónica Centenary