Europe Bemoans Lost Edge Over Asia, U.S. in Mobile Networks
(Bloomberg) -- Europe is losing its edge over the U.S. and Asia in mobile technology and the industry is blaming governments for dictating how it should invest and making it pay billions of dollars for operating licenses.
A recent auction of fifth-generation mobile spectrum in Italy was a “disaster” that sends the “worst possible signal” to investors, said Stephane Richard, chief executive officer of France’s Orange SA, at the FT-ETNO telecom industry summit in Brussels.
Prices of some 5G spectrum hit a record in the auction as Italy’s cash-strapped government tapped the industry for more than $7.6 billion -- money the industry believes would be better spent building those networks.
The CEOs of some of Europe’s biggest phone companies including Deutsche Telekom AG, Telefonica SA and Orange lined up at the Brussels meeting to demand an overhaul of digital industrial policy to make Europe more competitive with the U.S. and Asian nations.
Orange’s Richard said Europeans are the “champions of regulation” just as China is striving to become the champion of artificial intelligence.
“It’s not too late to catch up,” said Borje Ekholm, CEO of Swedish telecom equipment maker Ericsson AB. “We need to let the market forces drive this.”
Europe’s Lost Edge
While Europe’s phone companies have often been critical of state intervention, the tone has sharpened this year as their revenue stagnates and share prices hover near five-year lows.
Companies want governments to relax restrictions on mergers so they can accelerate investment, to let operators decide how much to charge one another to use their networks, and to re-frame incentives to push down the cost of building fiber-optic and 5G infrastructure.
5G was the first generation of mobile technology in which Europe has not taken the leading role, said Ericsson’s Ekholm. Rajeev Suri, CEO of Ericsson’s rival Nokia Oyj, said governments should issue cellular spectrum licences for a quarter-century as the current typical duration of 10-15 years was “simply not tenable.”
“No one would invest in road infrastructure with a 20-year investment horizon,” added Ekholm. “Why are we treating digital infrastructure differently?” He called for mobile operating licences that are much longer, or even infinite.
Executives said competition regulators were wrong to promote the idea that having as many as four telecom players in national markets was good for consumers. There was “no risk of monopoly” in Europe, said Orange’s Richard, as consumers already had the world’s cheapest prices for telecom services.
Dominique Leroy, CEO of Belgium’s biggest telecom company Proximus SA, said it was "a bit crazy" for the government to reserve a space for a new competitor in the country.
Belgium is “not even the size of a city in China,” she said.
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