5G & the Tech Decline of Europe

The decline and fall of Europe has become as fashionable a subject in technology circles as in political and economic ones. Noting the absence of a European Google, and the inexorable rise of Chinese technology players, commentators fret knowingly about the region's various shortcomings.

The anxiety now extends to telecom. Fear is growing that a tardy launch of 5G, a next-generation mobile technology, will have grave implications for Europe's future competitiveness. In all likelihood, much of this fear will prove misplaced. But it hints at the ebbing of European influence.

It is not hard to see why there is concern. Europe is home to relatively few of the high-tech giants steering the development of 5G technology. Ericsson AB (Nasdaq: ERIC) and Nokia Corp. (NYSE: NOK), its champions, have been losing out to Asian rivals. Europe's telcos, meanwhile, have been more reticent about 5G than operators such as US-based Verizon Communications Inc. (NYSE: VZ), South Korea's KT Corp. and Japan's NTT DoCoMo Inc. (NYSE: DCM), all of which have publicized plans to introduce 5G technology in the next three years.

Spectrum availability is a further worry. In the US, Japanese and South Korean markets, companies expect to take advantage of higher-frequency 28GHz airwaves to provide superfast services. That is persuading equipment makers to concentrate their initial efforts on a band that remains strictly off-limits in Europe, where it is reserved for satellite communications. (See Spectrum Hurdle Could Trip Europe in 5G Race.)

Yet the services that take shape over the next three years will be 5G ones only in the promotional literature. The first 5G standard is not due until 2018 and will not see commercial deployment until at least two years later. Instead, operators will be experimenting with aspects of 5G technology that could eventually become part of an official standard.

There are a number of possible motivations for these players. France's Orange (NYSE: FTE) reckons there is a more pressing need for mobile broadband technology in the US than in Europe, which is comparatively well served by fixed. Deutsche Telekom AG (NYSE: DT) similarly believes that specific market requirements are spurring action. "These activities appear to be utilizing specific elements of 5G to explore and satisfy real local needs, for example use of mobile capabilities to replace fixed telephony backhaul," said a spokesperson for the German incumbent in comments emailed to Light Reading.

In high-tech countries due to host major sporting events, authorities and companies alike are also keen to show off their 5G credentials. With the world's attention focused on the Winter Olympics in South Korea in 2018, and the Summer Games in Japan two years later, KT and DoCoMo will be looking to demonstrate their 5G leadership in front of an international audience.

Such early and well-publicized moves do not necessarily mean the 5G standard will take root in these markets more swiftly, however. Luke Ibbetson, the director of research and development for UK-headquartered Vodafone Group plc (NYSE: VOD), describes Verizon's "fixed wireless access" scheme as "niche," suggesting it will have little bearing on 5G as a mobile broadband technology. Arnaud Vamparys, the senior vice president of radio networks at Orange, is similarly dismissive of "non-standardized" 5G activities. "Experience has shown that non-standard solutions cannot be successful in the mobile telecommunications industry," he says. (See European Telcos Slam '5G' Efforts in Asia, US.)

Next page: Gaining a 5G edge

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liserets 1/10/2017 | 6:36:40 AM
very interessing very interresing point of view of the european 5G market
Gabriel Brown 1/10/2017 | 5:57:21 AM
5G & the Tech Decline of Europe I'm not as gloomy as you (and most people) are about European tech. In telecom it's true that the influence of European players has waned. This is to some extent natural given the extraordinary influence Europeans had on things like mobile telephony. To maintain that level of global influence woud have been anomolous. But yes, it hurts to lose those jobs.

Reasons to be cheerful: Two of the top three network vendors are European (nominally at least); several of the largest global operators are European; and there's a high-level of academic research across the continent. And in 5G, things like the 5G Automotive Association have a very European feel even if they are global in ambition. 

That said, in the end, you can't deny that there's no European Google or Amazon or Facebook or Baidu or Tencent. The reasons for this are part of a huge discussion that has gone on for, and will continue for, many years. A major factor, in my view, is that US and China both have a very large domestic market, with common language, culture, regulation, finance, and so on. Most other regions can't match-up to this, so home-grown companies can't achieve the same scale. India is perhaps an exception. Europe is not a single market.

It's also not zero sum game. The rise of China, for example, or Korea, in networking and tech over the past few decades has been phenomenal. Yes, these countries have "taken" some European business (e.g. handsets), but they have also contributed an enormous amount to the industry and to customers.
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