Slow rollout of full-fledged 5G is holding Europe back while China and the U.S. race ahead.
BARCELONA — When it comes to 5G, your smartphone is fooling you.
Many Europeans today might see a 5G icon when unlocking their phone, but are most likely still riding on a lower-grade connection of boosted 4G.
Europe is lagging behind China and the United States on rolling out top-level mobile internet known as 5G standalone (SA), so much so that some research suggests only 2 percent of Europeans are connecting to it.
The lack of full-fledged 5G threatens to stall European innovation, keeping the bloc’s industry stuck in the slow lane while other parts of the world speed ahead. Industry officials warn the lag is aggravating Europe’s competitive decline and the bloc’s ability to attract investment.
“At the start of the 5G cycle, vendors and operators put up huge promises about how it is going to enable robotic surgeries, autonomous cars, all this different stuff,” but none of that can be delivered until standalone architecture is in place, said Luke Kehoe, an industry analyst at connectivity intelligence firm Ookla.
European companies are missing out on faster speeds and game-changing capabilities that were supposed to take the industry to the next level — making factories smarter and more automated. Ultra-connected, robot-packed plants are still a work in progress, partly because operators haven’t fully upgraded networks, especially right down to the core parts, to the full 5G standard.
Trade association Connect Europe estimated that only 40 percent of the European population was covered by 5G standalone by the end of last year, behind North America (91 percent) and Asia-Pacific (45 percent).
But Ookla, which is behind the online tool Speedtest, crunched the data and found that fewer than 2 percent of Europeans are actually connecting to it today.
“We did see very, very clearly that Europe is markedly behind,” Kehoe said.
Signal for investments is weak
5G non-standalone (NSA) — which Europeans mostly have today — is like putting a turbo engine in an old car. It boosts the speed but still relies on the previous 4G infrastructure.
5G standalone, on the other hand, is like building a new high-speed train system from scratch. It requires time and money to optimize and upgrade the full network.
If anything, the sluggish roll-out “is an indication that we do not have the investment environment to compete,” according to John Giusti, the chief regulatory officer for GSMA, the global association of mobile operators.
The bloc’s biggest telcos have warned for years that the regulatory landscape, market fragmentation and restrictive merger policy in Europe have been squeezing profits and stretching their wallets thin.
“We don’t have the return on capital coming in to the sector to further invest and strengthen our networks. That is the core issue,” Giusti claimed.
Meanwhile, China — with more than twice as many robots in its factories as the EU — has made 5G standalone a policy priority, Kehoe said.
The country has a “huge base of enterprises that are using 5G SA in a manufacturing context for very, very low latency,” the critical time that data takes to travel to a server and back. “That’s where I think Europe would miss out now.”
India is also thriving, driven by its largest operator Reliance Jio, which leapfrogged the non-standalone phase and rolled out standalone infrastructure from day one.
But all hope is not lost for the old continent, as Ookla’s Kehoe underscored. “Fiber is particularly important in terms of competitiveness and, on that matter, Europe is doing very, very well.”
Chicken and egg
It’s not just about the money, or lack thereof, going into next-gen infrastructure.
“What you see in Europe is actually very rational investors’ behavior,” said Robert Mourik, chair of the BEREC group of European telecom regulators.
It’s a classic “chicken-and-egg” problem, he argued. “We are not investing too far ahead of the demand” — noting the industry’s timid appetite for something new — while also recognizing that struggling operators need to focus on clear revenue opportunities.
Connect Europe reported nine new commercial launches of 5G SA networks last year. It acknowledged that slow adoption “is largely due to operator concerns that the return on investment is unclear, the technology is immature and the migration from 5G to 5G SA is disruptive.”
For manufacturers selling the 5G kits, Europe needs to step on the gas. “I think the risk is we fall even further behind on both the existing industries but also missing out” on the ones “we don’t see yet,” said Jenny Lindqvist, Ericsson’s head of market for Europe.
Europe needs to play catch-up, she emphasised. “We have other markets outside of Europe where the infrastructure is there and we start seeing the new use cases.”
