Will we finally change the dynamic in 2024?

2024 is a year of change and new possibilities. The upcoming European policy cycle will provide an opportunity to address the stagnation and investment gap of European telecommunication companies, as well as to propel Europe’s digital transition.

Will we finally change the dynamic in 2024

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The past year has not been a good one for our sector in Europe. Unfortunately, this has been a bad habit for too long.

If you are not familiar with the telecoms sector, you may wonder why Europe is not performing well in this area given that the networks are not collapsing and the telecom companies seem to be doing well.

The answer is that the companies have been forced to sell parts of their own network infrastructure in order to keep investing in extra capacity, and they have had to constantly cut costs because they cannot increase their revenues above the Consumer Price Index (CPI).

The telecommunications networks investment challenge

In Europe, investment in very high-capacity networks are less than half that of countries such as the United States. We are falling behind, and this is the first time this has happened in Europe.

We would not be at the top, we would be a developing society if telecommunications networks were the only indicator of wealth in Europe.

With this message we want to call on political leaders to take action, because this situation can be reversed if the necessary measures are taken. But we have no time to lose, because we have a lot of ground to recover and these measures must be taken now.

New European political cycle

The political cycle will change in 2024, with the European Parliament elections next June and the appointment of the European Commissioners a few weeks later. 

The European institutions have agreed on digital targets for 2030 to achieve a world-class digital society. To achieve this goal, the investment gap is €300 billion according to ETNO evaluation . This is equivalent to the gross domestic product of countries with a population of 10 million, such as Portugal or Greece.

The European Commission publicly acknowledges this problem, and we also see in the latest Digital Eurobarometer that the majority of European citizens want better and more secure networks.

At the beginning of this legislative cycle, there was a talk of giving priority to the twin transitions, but they have not really been twins, only the green transition has made significant progress in policy terms.  In this next policy cycle, the focus needs to be on the digital transition and the lack of investment in connectivity needs to be urgently addressed with the necessary policies focused on investment in next generation networks.

Part of the solution also lies with the large internet platforms that generate 56% of all global data traffic. These internet giants need to contribute to the costs they generate on operators’ networks.

The regulatory challenges and the need for scale and investment

At the same time, there is an urgent need to address the outdated legislation based on the 1990s liberalization paradigm and competition policy only focused in priced reducing while ignoring the critical importance of investment and innovation.

In the 1990s, the largest technology companies were European, and now only the top 5 technology companies in the US are worth more than all the European listed companies.

There are 3 national mobile operators in the whole of the United States and 4 in a country as small as Luxembourg.

The United States has 5G in most of its territory, while Luxembourg has 4.5G at best.

Logically, it is necessary to achieve scale in order to have the financial muscle to make the huge investments needed to build the best and most secure networks. But this goal is unattainable under the current model of competition and telecoms regulation. For this to happen, regulation needs to focus on fostering a pro-investment framework and environment to deliver world-class services to European society.

The future of the economy and European citizens’ welfare lies in digitalisation, and this transformation is already accelerating new economic and social revolutions.

2024 pathways for sector change

2024 has to be the year of change, it is time to move from over-regulation to proper regulation promoting a pro-investment environment that would make possible state-of-the-art infrastructure. It is now or never. Citizens are not asking for more regulation; they are asking for their networks to be able to support 8K gaming or to connect seamlessly in the metaverse. We need to move from digital ’causeways’ to true digital highways. To do this, we need to start in 2024 with two fundamental changes:

  • Eliminate the outdated regulations based on the liberalization of the fixed-line sector of the 1990s.
  • Adopt a new regulation in the short term to create a regulatory framework that will allow European operators to develop a business plan that will lead to significant additional investment and enable European society to achieve the goals of the 2030 Digital Agenda.

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