logos insight analyses the make-or-break decade for Europe’s digital future


The make-or-break decade for Europe’s digital future

Despite many political promises and pledges, Europe continues to lose ground and independence in the digital world.

With a new strategy (and billions of euros of European funding), the Commission wants to reclaim much of the digital territory. The rollout of 5G and the development of 6G standards are the biggest test cases for Europe’s sovereignty in this decade.

The rollout of 5G networks in Europe is going anything but smoothly. Despite an intense push from the European Commission and strong commitments from the telecoms industry, the installation of this next-generation superfast communication network comes in fits and starts.

The figures speak for themselves. While in Eastern Asia and in the US, over three-quarters of consumers can already connect to 5G networks (in Korea, even 93% of Koreans), in the EU, this is only about one in four.

The rollout of 5G and the development of 6G standards are the biggest test cases for Europe’s sovereignty in this decade.

Reasons for the slow rollout

We can identify three culprits: radio spectrum policies, fragmentation of the telecoms market and political resistance.

In the countries and regions that are ahead of Europe, not only are investments in the new networks much more substantial, but also the availability of radio spectrum, which is vital to provide advanced 5G services. Just as many observers feared (including within the Commission), EU Member States are very slow in auctioning the spectrum licenses, for instance, for the crucial 3.5 GHz spectrum band.

Another hindering factor is the fragmentation of the telco market: in Europe, dozens of mobile network operators are active, whereas, in countries like the US, China and Japan, you only have less than a handful of players. Size matters, because the up-front investments in 5G are very high.

On top of this, some EU Member States continue to remain sceptical about the benefits of 5G and have internal political discussions about perceived dangers and risks. In Brussels, the de-facto capital of Europe, the local government refuses to allow 5G base stations and antennas to be built because “we don’t want our citizens to be lab rats.” Unsubstantiated fears of breaching radiation limits are the main reason for this blockade. In France, several politicians were calling for a nation-wide moratorium on the technology because of the – again unproven – effects on health and climate. Their amendments and objections have been dismissed; President Macron doubled down publicly on the need for France to shift to 5G.

The EU needs to become much more assertive on the digital front, and this goes way beyond a speeding up of 5G rollouts

From Gigabit to Terabit Society

It looks like a repetition of the 4G saga. While in the early 2010s this network was rolled out across the globe, the uptake of 4G in Europe stalled because of fragmentation of the market, fear of unknown effects and questions about the actual need for faster mobile internet. When the preparations for the 5G era started (around 2015), the Commission took a lot of actions to make sure Europe wouldn’t fall behind: it launched a 5G for Europe Action Plan (signed by the industry) and initiated a full-scale review of the EU’s telecommunications regulation. The vision behind all of this was to attain a ‘Gigabit Society’ by 2025.

A new opportunity arises with the 750 billion euro NextGenerationEU instrument that the EU created in response to the economic and social fallout of the Covid-19 crisis. At least 135 billion euros of this mix of grants and loans will need to be spent on investments in  Europe’s digital transition. Given the investment gap in the rollout of 5G networks, it is expected that Member States will use the earmarked-for-digital funds to invest in 5G, notably in areas where the business case is shaky (rural areas, border crossings etc.). For instance in Spain, the local operator Telefonica expects that, with the help of the EU funds, by 2025, the country could have 85% of coverage of high-speed fibre and standalone 5G networks.

The EU should double the number of unicorns in the next ten years, so as to create a counterweight against the Big Tech power coming from the West and East.

A digitally sovereign Europe

Another impetus comes from the Commission’s new Digital Compass 2030 targets, announced in Brussels on 9 March. The EU needs to become much more assertive on the digital front, and this goes way beyond a speeding up of 5G rollouts. Over the past years, Europe has lost ground as globally operating American and Chinese companies have become dominant players. ‘Big Tech’ is now more influential and pervasive than ever. From Google to Tiktok and from Facebook to Huawei: leading tech companies do not originate in Europe, apart from vendors like Nokia and Ericsson. A whopping 90% of Europeans’ data is managed by American companies such as Amazon Web Services, and most of that data is stored outside of the continent.

When the von der Leyen Commission took the helm in late 2019, it was already clear that it wanted to do something about this lack of digital sovereignty, and the responsible Commissioners Vestager and Breton frequently referred to this problem in articles and speeches. The European Council also asked the Commission to develop a strategy on the matter.

This strategy has now seen the light. In the coming years, the Commission wants to boost digitalisation of both the European economy and society, making public services across the EU fully digital by 2030. By that time, 5G and high-speed fibre networks will need to be available everywhere, including rural areas, in order to create a ‘Gigabit Society’ in Europe. (The Commission is currently reviewing the 5G Action Plan from 2016 and will present an updated version later this year.)

Data should be stored more and more on the continent itself, in 10,000 climate-neutral local computer centres (called ‘edges’). These edges form an important piece of the 5G puzzle and make almost real-time availability of data possible, to facilitate, for instance, self-driving cars in the near future. European countries have in the meantime already started to deploy a substantial public-private cloud-computing project called Gaia-X, to boost the regional data centre industry.

Furthermore, sovereignty in the digital realms could be increased by creating new ‘unicorns’ (start-ups with a value of more than 1 billion dollars). The EU should double the number of unicorns in the next ten years, so as to create a counterweight against the Big Tech power coming from the West and East.  Also, on the terrain of microprocessors, Europe needs to show its commercial teeth and cover 20% of the market value of semiconductors by 2030.

A final point is that the Commission already wants to step into the 6G race – even if the implementation of 4G and 5G networks in Europe has been lacklustre. 6G standards are far from developed and currently in a more academic phase – an opportunity for Europe to become a standard-setter rather than a follower. In order to kick-off this 6G future, the Commission announced a new Joint Undertaking on Smart Networks and Services, with 900 million euros earmarked for the R&D efforts on 6G and other advanced networks. With 6G we are no longer talking about gigabit but rather terabit speeds, making ‘an internet of senses’ possible.

What 6G will mean in practice remains to be seen. The same goes for the EU’s digital strategy to narrow the substantial technology gap with Northern America and Eastern Asia. The bulk of the unicorns continue to be born in those regions. China wants to use its advanced Artificial Intelligence knowledge to gain global economic dominance by 2030. It is pouring tens of billions of euros into further development of the national chip industry, while the United States is also bolstering state support for its own chipset manufacturers. On those areas and in many more fields in the digital economy, the race is on.

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