A European investment climate to support 5G roll-out

On 27 September, GSMA Europe hosted a Mobile Meetings Series focusing on the establishment of an attractive investment climate for Europe to ensure a fast and smooth roll-out of 5G. This blog provides an overview of the main issues raised during the discussion carried out under the Chatham House rule.

Together with Artificial Intelligence (AI) and the Internet of Things (IoT), 5G will transform every aspect of economy and society. To be able to deliver on its promises, the next generation of mobile connectivity requires significant investments. The EC has estimated the general costs of reaching the EU’s connectivity goals for 2025 as set out in the EC’s Communication on Connectivity for a Competitive Digital Single Market – Towards a European Gigabit Society, at €500 billion.

5G’s deployment may cost up to three times more than previous mobile technologies, in part due to the denser coverage of base stations needed to offer the expected capacity. Europe will achieve 5G roll-out, but concerns subsist over how to secure and who will fund the high levels of investments necessary to build the network infrastructure in time to keep the EU globally competitive.

The discussions revealed a strong consensus among industry, policy-makers and regulators that the current context requires all stakeholders to cooperate and act now. Participants recognized that 5G is not a one-man show but requires robust cross-border partnerships to fill the funding gap. Additionally, participants called on the European Commission to clarify the rules on horizontal cooperation for these partnerships to flourish. Support for such partnerships must move from the table to the market, if for example, autonomous cars are to travel across Europe in the near future.

Participants also flagged that investors see 5G as a simple follow-up to 4G and have so far overlooked its transformative powers. A parallel was drawn between the early 1990s, when the European Investment Bank (EIB) was the first to provide funding to the mobile sector at a time when its penetration rate was 2% with forecasts for 30% in five years. That investment sent a signal to the market that the European authorities had a long-term vision and commitment to the mobile sector that outweighed any short-term risks.

Positive story-telling about 5G was proposed as a way to attract more investors. 5G will, for example, be ten times more energy-efficient than the existing telecom generation. It will support other industries in meeting their sustainability targets, positively impacting climate change and being part of the solution. The potential for operators to develop new sources of revenue was also suggested as a partial solution to filling the investment gap. Attendees, however, questioned the feasibility of that solution as they felt that such revenue could not provide the level of funding necessary for long-term infrastructure financing.

Most participants agreed that clear messages and actions from the European Union to redress the fragmentation of the Digital Single Market would encourage investors. Obstacles include differing national approaches to spectrum allocation and network sharing; infrastructure competition and local opposition to 5G base stations over non-scientific allegations about the health risks of electromagnetic fields (EMF).

Various approaches to funding 5G infrastructure and roll-out will help the EU reap the full potential of this new mobile generation.