Strategic Spectrum Policies Could Revolutionize Mobile Investment in Europe

A recent report from the GSMA sheds light on the potential of revamping spectrum policies across Europe to stimulate significant infrastructure investment. Mobile operators in the region could unleash billions of euros in funding, facilitating accelerated deployments of 5G standalone (5G SA) networks and invigorating the continent's economy.

The report titled "Spectrum Pricing and Renewals in Europe," penned by GSMA Intelligence, delves into the historical challenges associated with spectrum pricing in Europe's telecommunications landscape. Over the past decade, the rising costs of spectrum have become a substantial burden for mobile operators, currently accounting for 8% of their recurring revenues. This financial strain is directly impacting their ability to invest in modern network infrastructure, particularly as Europe lags behind global counterparts in 5G adoption.

While only 2% of Europeans currently benefit from 5G SA services, in stark contrast with 77% in China and around 25% in the United States, there is a critical need for policymakers to act decisively. The ongoing discussions surrounding the Digital Networks Act provide a timely opportunity for Europe to shift direction and make the necessary changes in spectrum management.

Over the next decade, more than 500 spectrum licenses are set for renewal. These licenses are essential for maintaining existing service quality as they primarily cover the 3G and 4G networks, which serve approximately 470 million mobile internet users in Europe. The outcomes of these renewals could significantly influence the level of investment available for infrastructure improvements.

Current projections indicate that operators will face spectrum costs amounting to €105 billion through 2035 under existing policies. However, if reforms are implemented regarding renewal strategies, up to €30 billion could potentially be saved. Such financial relief could finance the necessary upgrades for existing 5G networks to transition to 5G SA, enabling speeds to increase by up to 23% and contributing as much as €75 billion in additional GDP over the next ten years.

Achieving these financial targets, however, hinges on comprehensive policy reforms and a cohesive European strategy towards spectrum licensing and renewals. As highlighted by John Giusti, Chief Regulatory Officer at the GSMA, investing wisely in connectivity infrastructure is vital for enhancing Europe’s global competitiveness.

Giusti states, "Providing high-quality connectivity to Europe's citizens and improving the continent's competitiveness requires a lot of investment that many operators are struggling to source or justify. Smart reform of Europe's spectrum policy will have an immediate and enduring impact."

The current approach tends to treat spectrum as a revenue-generating asset rather than a strategic tool for improving connectivity. This short-term mindset limits the potential for reinvestment into the industry. Policymakers are, therefore, urged to reassess their strategies and redirect funds raised through spectrum sales towards supporting ongoing digital infrastructure initiatives across Europe.

In conclusion, there lies a pressing need for a coordinated and ambitious approach towards spectrum policy reform for Europe to bridge the gap with its global peers. By unleashing the potential for substantial investments through smarter, more collaborative policies, Europe can accelerate its journey towards achieving a robust digital ecosystem that benefits all its citizens.