This article is part of the special report: The State of 5G.
Europe is being left behind in the race for faster internet.
A trailblazer at the turn of the century thanks to the rapid rollout of 3G wireless technology, the European Union lost its lead to rivals in North America and Asia, with relatively sluggish adoption of 4G, the next generation of faster mobile broadband.
Now countries and companies across the world are preparing for 5G, a quantum leap in connectivity with the potential to unlock advanced applications in areas running from self-driving cargo trucks to software-driven management of “smart” cities to interconnected drones and remote surgery.
The worry, shared by many in the industry, is that the EU is on track to fall behind in the deployment of 5G — particularly as rivals in the East race ahead. “In terms of 5G rollout, Korea and China are globally ahead of the rest of the world,” said Rui Luis Andrade Aguiar, chair of Networld 2020, a think tank that advises the European Commission.
A recent survey of chief technology officers by the consultancy McKinsey suggested that European firms expect 5G to go live only in 2021-2022, while counterparts in the U.S. and China expect to have the infrastructure in place before then — in some cases as early as next year.
European companies and governments face a logjam of obstacles to adopting 5G, some self-inflicted, some external. At stake is a global market estimated to be worth €225 billion in mobile services by 2025.
Regulatory hurdles are accused of slowing 5G adoption in (already heavily regulated) sectors like energy, health care and transportation.
But many involved in laying out mobile networks in Europe point to the cost of spectrum — the airwaves mobile signals travel on — as the biggest hurdle to moving ahead.
To regulate the market, governments auction off the right to use swaths of the radio spectrum for commercial purposes, like moving data. The more applications use data, the larger the swathes of the spectrum needed to move it — making space on the frequency a scarce good in an increasingly data-hungry economy.
Europe’s large 5G spectrum auctions have experts worrying. Last year, when Italy led the continent’s first big one, the price of Italian radio spectrum quickly soared to a dizzying €6.6 billion of costs that operators paid in total to offer 5G services.
Analysts fear that European auction prices could spiral so high that telecoms would be left with little money to actually build and install new 5G antennas and base stations.
Last month, a German auction dragged on for a month and a half, with German spectrum costing mobile operators a total of €6.5 billion.
“When 3G came out, governments saw it as a great opportunity to make money. When 4G came out, governments considered that they shouldn’t make the same mistake again. But what happens is that governments have short memories,” said Aguiar. “Some remember, but others don’t.”
Then, there’s the problem that not all countries can guarantee the same parts of the radio spectrum for similar services at the same time. A car could be connected on one band but be forced to jump to another one when it crosses a border.
To avoid that problem, the outgoing European Commission worked hard to convince member states to hold their spectrum auctions at the same time and free up similar bandwidths for 5G. The strategy appears to be working, but it won’t help Europe as a whole catch up to rivals fast enough, as experts warn it could be years until 5G services seamlessly travel across borders.
The EU’s reform of telecom regulation, agreed last year, includes measures to nudge governments toward collaboration. But national capitals pushed back on giving EU authorities too much power — notably when it comes to control of the radio spectrum and how it is bought and sold.
The outcome for now is that part of Europe has pushed ahead of freeing up and renting out airwaves, but a large group of national governments seems less hurried.
Then, there’s inequality. Or just lack of interest: The EU’s 5G Observatory recently said that about half of EU countries had yet to publish national strategies for adopting 5G. The half that did tended to be richer.
The resulting unpredictability matters because for 5G to be successful the technology must be widely adopted.
Investors will be reluctant to set up 5G infrastructure if they can’t count on consumers and businesses buying their services. And if 5G isn’t widely available in a country, consumers won’t want to upgrade to expensive 5G phones and businesses will shy from shelling out for new digital networks for their offices and factories.
“5G is great, but it is not going to be used for everything,” said Sylvain Fabre, senior director at the tech intelligence firm Gartner. “Vendors and operators need to be much more specific about what the unique value of 5G is,” he said.
“A lot of use cases don’t need the 5G yet, and it won’t be economically feasible,” he added.
Europe still counts a few 5G optimists.
EU countries have over 150 trial 5G systems already running in ports, on highways and elsewhere, the European Union’s 5G Observatory estimated in its last quarterly report. Commercial 5G popped up in Tampere, Finland and Tallinn, Estonia, already last year.
And Europe’s largest operators say they will be rolling out commercial 5G networks in cities including London, Rome, Milan, Madrid and Edinburgh.
“Sure, we don’t have a [European equivalent company to] Facebook or Google,” said Andrus Ansip, former European Commission Vice President for digital affairs. “But our so-called traditional industries are developing in digital really rapidly.”
“They have to use data analytics, put sensors into engines, get information, use artificial intelligence,” he said. “That’s the way you can compete with the rest of the world.”
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