• Data traffic volume growth will be driven by 5G in western Europe and mass adoption of 4G in eastern and central Europe
• Industry body the GSMA claims mobile data services will contribute more than €1tn to Europe’s economy each year by 2030
• But ever-increasing demand means operators have to continue to spend heavily on network upgrades
• The dispute over big tech ‘fair share’ contributions to telco capex pots remains a contentious issue

The volume of data traffic running over Europe’s mobile networks is set to triple over the next five years, according to industry body the GSMA, which is using its forecast published in its new European Mobile Economy Report to send its latest ‘fair share’ contribution message to European Union lawmakers.

According to the report, the growth in traffic will be driven by “increasing improvements” in 5G coverage and capacity (mainly in western Europe in general, and Germany and the UK in particular), and the mass uptake of 4G in eastern and central Europe.

The GSMA report adds that Europe’s 5G subscribers – of which there are a growing number, but nowhere near the runaway figures that operators had been hoping to attract by late 2023 – are already playing a major part in driving increased data and video traffic volumes as they opt for access to high-bandwidth services and high-definition content to be included in their service bundles. The demand for high-quality gaming, extended reality and video content continues to accelerate.

As ever, the GSMA, which represents the interests of the mobile operator community, has assigned economic value to its members’ services, estimating that the mobile sector’s economic contribution in Europe in 2022 was €910bn and that the sector’s annual economic contribution is on course to exceed €1tn by 2030. The new GSMA report also shows that, last year, mobile technologies and services were responsible for 4.3% of Europe’s GDP (gross domestic product), while the entire mobile ecosystem was managed by 2.2 million direct or indirect employees of telcos and service providers, and it contributed €110bn in tax revenues.

At the same time as highlighting that positive economic impact, the GSMA points out that operators “continue to face real investment challenges as bandwidth demands grow.” 

The report’s authors point out that growing pressures on mobile wireless networks will mean that operators will have to continue to plough heavy capital investment into upgrading their infrastructure as bandwidth demand continues to grow. The GSMA says that the region’s operators are expected to have invested €198bn by 2030 on network upgrades and that figure could easily rise by many billions more when, or if, 5G demand hits critical mass. It’s a potential problem, but hardly an insoluble one.

One of the answers, of course, is to get the big tech firms – now referred to in European circles as the “large traffic generators, or LTGs – to make ‘fair share’ contributions to the operators’ investment budgets: It’s an old notion and one to which the big tech firms (and many others) stand implacably opposed, calling it a de facto “internet tax.” 

Last year, the CEOs of 16 big European telcos called on the European Commission (EC) to act to “protect the viability and expansion” of Europe’s comms networks. The EC’s response was to publish a document noting that the argument is “a complex issue which requires a comprehensive analysis of the underlying facts and figures, before deciding on the need for further action. The commission is strongly committed to protecting a neutral and open internet.”

Some “exploratory consultations” took place but in the face of consistently aggressive lobbying by big tech, the EC seems to have put the issue on the back burner where it quietly simmers and bubbles away. It could still erupt at some point but for the moment things are relatively quiet. And the EC doesn’t seem keen to stir the pot.
 

5G to become dominant mobile technology within three years – maybe

The report also claims that 5G will become the dominant mobile technology in Europe (but not necessarily across all of it) by 2027 and will be available to 87% of all Europeans users by 2030. What’s more, 5G will be of great benefit to a wide range of business sectors and European economies. It says that, by 2030, 53% of 5G’s business benefits will originate within the services sectors, while close to 30% will come from manufacturing, driven by applications including smart factories, smart cities and smart grids. Thus, 5G will be instrumental in improving European GDP and will account for €153bn in economic benefits by 2030.

All very positive, but in a reiteration of its big tech ‘fair share’ caveat, the GSMA cautions that 5G growth could be stunted by “policies holding back investment in next-generation network technologies in Europe, threatening the bloc’s digital leadership globally, as well as ambitious ‘Digital Decade’ goals.” 

It cites as an example that European adoption of more capable ‘standalone’ 5G continues to lag behind other regions. At the end of last year, a mere 5% of live 5G networks in Europe were 5G standalone (SA), compared with 25% in the Asia Pacific region. This, the report says, “is a reflection of the challenging operating environment operators in Europe continue to face amid market fragmentation and low returns.” Hmm. What about consolidation and ever-increasing tariffs then?

Daniel Pataki, VP for policy and regulation, and head of Europe for the GSMA, commented, “Europe has a strong history of leadership in mobile and digital technologies, but strong, sustained investment in networks is now needed to regain that leadership in the face of global competition. We’re encouraged to see European policymakers now facing up to that reality and examining the potential for meaningful policy change on areas such as consolidation, spectrum harmonisation and the creation of fairer investment models for infrastructure, as we go into 2024. Our report shows that action is needed now to give European citizens and businesses the digital infrastructure they need for the future.”

Meanwhile, the mobile internet usage gap in Europe continues to narrow. Currently, more than 460 million Europeans (85%) are now connected, reducing the gap to just 14%. Most European countries have internet coverage by mobile, while the likes of Denmark, Italy, Spain and Portugal, hit the 90% mark at the end of 2022.

- Martyn Warwick, Editor in Chief, TelecomTV