Mobile operators face massive network investments
Mobile operators are facing high investments for the massive deployment of 5G, while streaming and the popularity of gaming are putting an increasing stress on existing telecom networks.
Europe is lagging in 5G adoption
In the race to adopt 5G technologies, Europe is clearly trailing. According to the GSMA 2022 Mobile Economy Report, in Europe, only 4% of current mobile connections are 5G, compared to 29% in greater China and 13% in North America. Although the European Commission launched a 5G spectrum action plan in 2016 to ensure the early deployment of 5G infrastructure across the EU, the roll-out is experiencing delays. Some member states are grappling towards adopting the technology, while those who have adopted it are still utilizing 4G frequency bands for data transmission with 5G equipment. This is enough for consumers merely using social media through 5G networks, leaving them rather indifferent to 5G. When it comes to applications for driverless cars, smart cities and Internet of Things, however, 5G is needed. Although large European manufacturing industries have started to roll-out private 5G networks to improve their processes, companies in general show little interest. The situation worries mobile operators, who face high investments for the massive deployment of 5G but have not yet found a way to make those investments profitable.
Broaden Your Horizons
- In a previous Horizon, we wrote how Elon Musk’s satellite network Starlink, among others, is building a network to provide internet services. Recently, CNBC published an article stating that SpaceX, the company behind Starlink is looking to raise $1.7 billion in new funding at a valuation of $127 billion.
- Innovations often have unintended consequences. WIRED describes the key factors that make it difficult for us to predict long-term consequences. Moreover, they consider ways on how to embed design philosophy into an invention to prevent potential misuse.
- Quantum computing will not reach its potential without “quantum internet”. This NYT article highlights how a team of physicists at the Delft University of Technology is building such small quantum networks.
Who has to pay for bandwidth?
5G investments are not the only point of concern for mobile operators. The ongoing shift to remote work, the proliferation of streaming and the popularity of gaming are putting an increasing stress on existing telecom networks. It poses questions about the way networks are funded. In December 2021, UK internet traffic soared to a record of 25.5 terabits of data per second, well above the margin UK operator BT said it could handle. As more and more companies are betting on the metaverse, this record will definitely be beaten again. In Australia, streaming is already driving 80% of network traffic, resulting in a request from the country’s second-largest operator to let video gaming, social media and streaming companies pay more for the high amounts of data their customers use. Telecom providers are not alone in their push, as regulators in the U.S. and Europe are exploring if they can force Big Tech companies to pay more for internet services. It is clear that someone has to pay if social media and tech companies want to keep making use of the telecom infrastructure they built their businesses on.
Horizons is a bi-monthly Dasym Research initiative to show you how the Dasym themes have been in the news. We publish the Horizons on our website and as an email newsletter. If you wish to receive the email, sign up here.
Do you have questions about the digitalization of customer’s daily lives? As a research-driven investment company, we want to be relevant to you, so please provide us with you questions and remarks. Your feedback will help us to drive our research agenda.