Overcoming Europe’s connectivity challenges to reclaim global leadership

DIGITALEUROPE welcomes the European Commission’s strategic evaluation of the EU’s connectivity landscape. Our vision aims to elevate Europe to a Digital Powerhouse, setting ambitious targets for universal gigabit internet and 5G coverage by 2030, necessitating decisive policy actions.

Europe has long grappled with connectivity challenges compared to global peers. In our 2022 Mind the Gap report, we identified inadequate returns on private investment and significant delays in spectrum auctions as key barriers hindering European leadership in fixed and mobile networks, with growing concerns about Europe’s position in the forthcoming 6G era.

To reclaim its technological leadership, Europe must confront these challenges head-on. Our recent analysis of Europe’s competitive standing in critical technologies underscores three primary obstacles: market fragmentation and a lack of strategic coherence hindering our companies’ scalability; a substantial investment gap relative to global rivals, compounded by insufficient innovation commercialisation; and stringent regulations that disadvantage European businesses, stifling their growth potential domestically.

This assessment is particularly relevant in the realm of connectivity, where despite leading in R&D and network innovation, Europe struggles due to an unfavourable business environment and tepid user demand. Strengthening Europe’s competitiveness demands fostering a climate conducive to investment and enhancing returns in the sector.

This paper puts forward the following analysis of the Commission’s assessment and proposed actions:

• Network virtualisation and open architectures are pivotal trends that can pave the way for innovative services and applications. Portraying them as obstacles or risks misrepresents their potential, and could undermine confidence and innovation in the market.
• Europe must maintain its leadership in connectivity technologies, such as cloud-native 5G, through advanced research and innovation (R&I) activities. The proposed coordinating role for the Smart Networks and Services Joint Undertaking (SNS JU) should avoid shifting towards commercial deployments, remain telecoms-centric and industry-driven, allocate additional funding for related fields like telecoms-related cloud and AI, and preserve its current governing structure.
• Whilst the objectives of EU telecoms regulation could be broadened to emphasise the role of connectivity in Europe’s competitiveness and sustainability goals, current economic and security concerns do not justify a scope expansion to encompass convergence between electronic communications and digital services. Instead, ‘levelling the playing field’ could be achieved by reducing regulatory burdens on telecom operators, thereby incentivising the substantial investments required to meet Europe’s connectivity objectives.
• We support the proposed measures to accelerate the transition from copper to fibre networks through revised access policies that reduce ex-ante regulation whilst allowing national regulatory authorities (NRAs) to maintain oversight under a reverse burden of proof. Transitioning to fibre, 5G fixed wireless access (FWA), and low Earth orbit (LEO) broadband offers substantial advantages.
• Balancing centralised oversight of spectrum management in Europe with Member State flexibility is crucial to accommodate local conditions whilst ensuring coherent implementation essential for launching advanced technologies at scale. We support stronger EU-level coordination to address pricing disparities and auction rules that have been delaying network deployments.
• We support the Commission’s push for advancing R&I in quantum cryptography, particularly focusing on post-quantum cryptography (PQC) to bolster communications and data resilience against potential quantum threats. This should be achieved through transparent technical standardisation processes. We also support initiatives to secure and bolster the EU’s submarine cable infrastructure, but regulatory burdens that could deter investment should be avoided.