GSMA hails European mobile performance but wants regulatory holiday anyway

Europe’s mobile operators are doing brilliantly, according to a new GSMA report, but it still wants regulators to give them free rein to potentially ruin everything.

Highlights from its annual European Mobile Economy (PDF) report include the sector’s €910 billion contribution to Europe’s economy in 2022, and its employment of 2.2 million people – both directly and indirectly.

Mobile-based productivity generated €670 billion of value to the economy, while operators’ own contribution generated €110 billion. Operators also paid €110 billion of taxes last year.

By 2030, it is expected that European mobile operators’ economic contribution will reach €1 trillion, driven by the continued expansion of the ecosystem and take-up of advanced mobile services by more and more verticals.

In terms of coverage and usage, 460 million Europeans are now covered by mobile networks, reducing the coverage gap to just 14%. There are 900 million active phone connections in Europe, and penetration of smartphones and feature phones is expected to reach 91 percent by the end of the decade.

As for 5G, networks are on course to reach 87% of all mobile users by 2030, and the technology itself is expected to generate €153 billion of economic benefits.

However, the GSMA wants policymakers to disregard these achievements and undertake a regulatory experiment that could have some unintended and unwelcome consequences for end users.

“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,” said Daniel Pataki, VP for policy and regulation, and head of Europe for the GSMA.

To underscore its point, the GSMA noted that only 5% of commercial 5G networks in Europe have been upgraded to standalone (SA), compared to 25% in Asia-Pacific.

The GSMA claims Europe requires a reset of its policy framework governing digital communications, reforming what it calls outdated – and still largely national – regulatory approaches that have failed to deliver on the vision for a single telecoms market.

Recent developments, including the European Commission’s consultation on whether so-called large traffic generators (LTGs) should contribute to the cost of infrastructure investment – the fair share debate – and European Commissioner Thierry Breton’s call to facilitate consolidation that will create pan-European super-telcos, are welcome developments, he said.

The GSMA expects mobile network traffic to triple over the next five years, and therefore “our report shows that action is needed now to give European citizens and businesses the digital infrastructure they need for the future.”

However, there is plenty of evidence to suggest that the remedies that the GSMA is proposing will actually lead to worse outcomes for users.

Take consolidation, for instance. A report in June by the Balanced Economy Project, co-authored by professor Tommaso Valletti, head of economics at Imperial College Business School, concluded that in-market consolidation leads to higher prices and no increase in investment, despite telcos’ claims to the contrary.

The report, which was published following the agreement of the Vodafone UK/Three merger, claims that the average mobile customer will pay between £50 and £180 more per year if the deal goes ahead.

The US is often held up as an example of a mobile market where just three big operators, plus a smaller one in Dish, serve a market of 300 million people, whereas in Europe, four operators per market tend to fight over tens of millions of customers.

However, Valletti’s research highlights that investment levels in the US are lower than Europe, because there is less competitive pressure in the former. The reality is, the money that merging operators claim they will spend on infrastructure ultimately finds its way into shareholders’ bank accounts instead.

The US isn’t exactly flying the flag for 5G standalone either. Of its three giant mega-telcos, only one, T-Mobile, has made meaningful progress. Meanwhile, in October, AT&T said it was holding off activating its standalone core until the device ecosystem matures, while Verizon in November revealed that it is not quite confident enough in the technology to put its 5G SA core to commercial use.

And when it comes to making big tech contribute to infrastructure investment, there’s every chance that big tech will argue that without them, there wouldn’t be demand for mobile network access in the first place, and that perhaps it should work both ways, with telcos chipping in on data centre and content delivery network investment.

Take Meta, for example. It claimed earlier this year to have invested $100 billion since 2017 in global digital infrastructure. As the founder of the Telecom Infra Project (TIP) it has also helped to coordinate and shape the industry-wide development of new technology like Open RAN.

Taking all this into consideration, the European mobile industry needs to come up with a stronger argument for why anything should change.

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