Europe is playing catch-up on connectivity, bold changes needed to lead the way

The EU’s ambitions to boost the continent’s competitiveness in the global economy are being hampered by a significant delay in achieving connectivity goals. We call on European leaders to have an overdue discussion and radically overhaul the telecoms governance with a new Connectivity Act.

DIGITALEUROPE’s latest report on Europe’s connectivity standing reveals that the bloc is losing the global network race, and that 2030 connectivity targets won’t reverse this trend.

The report, which surveyed 20 connectivity experts across digital companies and national trade associations, has found that poor return on investment and significant delays in spectrum auctions across Member States are deepening fragmentation of the single market and deterring investment.

DIGITALEUROPE’s Director-General Cecilia Bonefeld-Dahl said:

“Europe has known decades of regulation with a heavy focus on bringing down consumer prices. Our governance has been fragmented across 27 countries. This has had a very negative impact on Europe’s ability to invest in networks and to lead new technology developments.

In these terrible times, when Ukraine is at war and its digital infrastructure is under heavy attack, failing to lead on connectivity will not only considerably slow down the digital transformation of our SMEs and civil society, but it will also hamper Europe’s resilience. High-capacity networks are also one of the most powerful enablers of a digital and green transition.

Member States committed to assigning all 5G spectrum bands by December 2020. Over a year after the deadline, there are only seven Member States who had assigned spectrum in all three 5G pioneer bands, and as many as five are yet to assign any of the pioneer bands.

Member States should immediately auction all 5G spectrum bands and make use of their national recovery funds. We are extremely late while other countries have already reached their targets.”

Spectrum refers to radio frequencies that wireless signals travel over. DIGITALEUROPE’s report shows that costly spectrum prices and fragmented auction rules, both nationally and across Member States, are among the top reasons for the delay. Fragmentation is heightening market uncertainty and making many European countries unattractive for business.

About the report

DIGITALEUROPE’s new report Mind the gap: A new Connectivity Act for the Digital Decade provides a snapshot of the current state of fixed and mobile connectivity in Europe, through interviews with leading experts from across DIGITALEUROPE’s membership of both corporates and national trade associations.

Main findings

A lack of return on private investment (56 per cent) and considerable delays in spectrum auctions (69 per cent) are seen as the main factors hampering European leadership in fixed and mobile networks respectively.
None of the experts feel very confident that under current conditions Europe will be leading the future 6G race. 50 per cent are only somewhat confident, and 25 per cent are openly sceptical.
Current levels of public funds, particularly the Recovery and Resilience Facility (RRF, mentioned by 44% of respondents), can rebalance historically insufficient funding by Member States level. Public money, however, is deemed insufficient by most experts to change the overall investment landscape in Europe.
While there is mild support for Europe’s fixed connectivity targets, which are considered appropriate by up to 70% of respondents, almost one in three experts (25%) find the targets not to be ambitious enough in light of available multi-gigabit technology.
More than one in three respondents (38%) find Europe’s 2030 mobile targets to be either partially or completely inappropriate, and believe they should focus on clear 6G targets as opposed to merely playing catch-up on 5G. Only 50% of respondents find the targets to be appropriate.

Four actions to reverse this trend

Radically overhaul telecoms governance with a new Connectivity Act to achieve greater European harmonisation. Member States and the Commission must look at further sharing of binding decisions at European level, first and foremost when it comes to spectrum, to avoid repeating the same mistakes all over again with 6G.
Put network investment at the top of policy and regulatory action. A new Connectivity Act should rebalance policy towards promoting investment in networks, with a key criterion for competent authorities to focus on service quality and coverage, not only the level of consumer prices.
Implement the Commission’s Connectivity Toolbox to address the investment gap in the immediate term.
Make full use of available public funds for connectivity. Financial instruments such as the RRF and CEF Digital represent the biggest public financing to date potentially available for network infrastructure and digital transformation and must be used to their fullest extent to act as catalyst for private investment.