4. 9. 2019
In what shape is the European telecom industry?
In one of our recent posts, we already spoke about
what trends on the horizon will transform the telecom industry. This time, we have decided to press the pause button for a moment, and look more
thoroughly into the current condition of the telecom industry – in particular,
European industry. How healthy is it, what are its top trends, where is it
headed and what are some of the biggest challenges?
What do the numbers say about the European telecommunications industry?
According to Etno’s annual report
, today’s network speeds in Europe are still higher than the global average, which is somewhat expected, given that European operators were always at the forefront when there was a need for network development.
When looking at telecom investment and spend, however,
the European region appears less healthy than its global peers, the report
says. One of the possible reasons for that is that Europe is already covered
with a very dense and fast network. Many European operators are therefore still
focused on getting the best return from the money they had invested in their 4G
networks, rather than investing it in new technologies – which is different than
in the US or China where cell towers are more sparsely distributed and the
demand for a higher capacity network is much higher than in Europe.
Those countries are expectedly moving fast toward implementing 5G. Particularly China, who views 5G as a key to becoming a tech leader not just in wireless but in the Internet of Things and artificial intelligence as well.
So without the consumer demand and overcapacity on current networks, can European operators justify launching wide-scale 5G across Europe? The question is even more important in the light of the realization that operators still do not know how to monetise on 5G.
Running in place with implementing 5G could have dire consequences for Europe as it could leave Europe’s traditional industries at a competitive disadvantage.
But with or without it, Europe still has its own challenges it needs to overcome, such as:
- Europeans use fewer telecom services in contrary to users from other parts of the world (Etno’s report).
- The decline in revenue from traditional communication is increasing.
- European telco market is quite fragmented with more than 120 major operators scattered across 28 member states, which triggers intense competition and price wars.
In light of these circumstances, it is not surprising that major
European telecoms have begun to buy smaller operators and cable networks in
order to expand their offer and compete with over-the-top digital natives that
are entering the core telco market with innovative business models and
technologies. And this consolidation in global and regional markets will
continue in the next three years.
In conclusion, European telecom industry is in good health but it will
need to keep moving away from just providing faster network speeds to
consumers, and towards enabling a whole range of new services and
technologies to support the digital transformation of European industry and
society. There are many adjacent market opportunities where telecoms should use
their digital business capabilities and focus to gain market share and create
new revenue. Current hype around 5G is a good opportunity to develop new
vertical markets and business models while even reusing some of the existing