Pan-European telco is a great idea but national interest usually wins – Ericsson

The idea of a pan-European telco is one which has been pondered for some time, but according to Ericsson’s Ulf Ewaldsson, it is one which should perhaps be revisited.

The countdown to 5G has begun and the starting grid is starting to look a bit more orderly. There are some at the front, revving engines, itching to begin, while some are lurking at the back, taking the marathon approach. Both strategies have merit, but for Ewaldsson one is clearly better than the other.

“Every new generation (of mobile technology) creates new winners,” said Ewaldsson. “And the ones who are first out of the gate are usually win.”

This idea of sprinters and marathon runners might come down to the different regulatory environments around the world. In Europe, there is no consistent regulatory framework, which Ewaldsson believes is significant issue for the telcos; perhaps creating a pan-European environment would be the way forward.

There is a distinct line between some telcos who are ambitiously looking towards 5G, and those who are hording a healthy dose of pessimism. The pessimists are generally in Europe, while the North American and Asian telcos are much more energetic when it comes to drawing up plans to push forward into the 5G world. But this sense of pessimism is nothing new for Europeans, the big problem might be more around scale and ROI.

European telcos are by nature smaller than some of the counterparts in North America and Asia. Generally European telcos are restricted to their own borders, meaning a limited number of potential customers. Across the European Union, there are roughly 510 million people split between 28 member states.

The European Commission also has it in its head that it wants four operators per market, so that is 510 million potential customers split between 112 telcos. When you compare this to the US, where four telcos are battling for 320 million potential customers, or China where three major telcos are fighting for 1.37 billion punters, the numbers in European don’t really add up.

This is the foundation of the pan-European telco idea; there are simply too many telcos across Europe. The number of customers is too small, therefore generating ROI on any network investment is difficult, and slow. Ewaldsson highlighted that the smaller operators, who are perhaps considering delaying the investment in 5G, will only fall further behind as there are no prizes for second place. Verizon was first out the door for 4G and look what happened there.

From a macro-economic perspective, the idea of a pan-European telco is very attractive. Networks are simply too small at the moment. Ewaldsson pointed towards the element of scale and the efficiency benefits as justification, but of course the national interests of the state trumps logic to create a telco industry which is healthy.

The European Commission has been trying to harmonise the member states for some time, but there has always been variances and nuances between the member states which prevents any genuine cross-border progress. Asking politicians to make any concessions for the benefit of anyone else would of course be asking way too much. According to Ewaldsson, the regulatory landscape would prevent any pan-European frequencies, which is a pity.

This idea might have to be filed away as optimistic thinking. For all the benefits which a pan-European telecommunications industry might offer, the boresome bureaucrats will probably be an immovable hurdle.

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  1. Avatar Arno_K 01/12/2017 @ 4:25 pm

    The article seems to fail to note that e.g.

    – Vodafone Group has a presence via direct infrastructure-based operations in 4 out of top-6 European markets by population
    ( Germany, UK, Italy and Spain ) – and a dozen operational entities across EU covering about 300 million potential customers …

    – T-Mobile has over 150 million subscribers across their US and pan-European operations.

    • Jamie Davies Jamie Davies 04/12/2017 @ 9:22 am

      Hi Arno – appreciate that there are several groups which have operations in multiple markets, but due to localization regulations, each business has to act as a stand-alone business – operational, purchasing and research efficiencies will be minimized as requirements will have to localized as well. The point Ewaldsson is trying to make is that if you have consistency throughout Europe you can have a singular operation across the entire continent which will be more operationally efficient, therefore creating healthier telcos

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