Europe's telcos are already lagging counterparts in Asia and the US when it comes to investment in 5G technology, according to Hossein Moiin, the chief technology officer of Finland's Nokia.
While a 5G standard has yet to arrive, Moiin said he was "not optimistic" about the outlook for the next-generation mobile technology in Europe, blaming the region's regulatory authorities for their lack of "investor-friendly" policies.
During a briefing with reporters in London earlier today, Moiin also said that Europe's operators were reluctant to take the same "risks" as those in other parts of the world.
The remarks come just a few days after an alliance of telecom industry lobby groups criticized the European Commission for what they see as a lack of focus on 5G, and suggest that Nokia Corp. (NYSE: NOK) is struggling to sell its 5G vision to the region's telcos. (See Eurobites: Operators Slam EC's 'Timid' 5G Efforts .)
Earlier this year, several of Europe's biggest operators were reported to have told the European Commission that its 5G action plan, which calls for investment in the standard, was a "pipe dream."
Even so, executives from France's Orange (NYSE: FTE) and UK-based Vodafone Group plc (NYSE: VOD) have previously rebuffed suggestions they are falling behind Asia and the US on 5G rollout. (See European Telcos Slam '5G' Efforts in Asia, US.)
"Europe is not lagging the US and Asia on the development of 5G," said Luke Ibbetson, Vodafone's director of research and development, in comments provided to Light Reading earlier this year. "The 5G standard has not yet been fully agreed and is unlikely to appear on a commercial network for a number of years... it's difficult to see how Europe could be regarded as lagging."
Since Ibbetson made those comments, however, the 3GPP has agreed a plan to speed up the development of the 5G standard, while a number of US operators have said they plan to launch standards-based 5G services before 2020. (See 3GPP Approves Plans to Fast Track 5G NR.)
Number-three mobile operator T-Mobile US Inc. has even said it will launch a nationwide 5G network by the end of 2020. "I think we can help them to reach that by the end of 2020," said Moiin during today's meeting. "It is very aggressive but they want to be not just a low-cost leader but also a technology leader." (See Is T-Mobile's 5G Plan Just a Pipe Dream?)
So far, none of Europe's major service providers have made 5G commitments on this scale.
Deutsche Telekom AG (NYSE: DT), T-Mobile's German owner, has perhaps come closest, announcing plans at this year's Mobile World Congress to launch 5G across the entirety of its network but without saying when. (See DT Plots 5G Across Entire Footprint.)
Timotheus Höttges, Deutsche Telekom's CEO, has flagged concern about the cost of rolling out 5G technology, suggesting the bill to cover the whole of Europe could be anything between €300 billion ($337 billion) and €500 billion ($560 billion).
Moiin says the European Commission could spur interest by waving through mergers and acquisitions at a "cross-border" level to produce "four or five" big European players.
"The FCC [the US telecom regulator] is maybe more enlightened in these matters than the European Commission," he says. "What is broken in Europe is that investment is not there and so innovation can't follow."
However, relatively few operators would be in a position to lead such cross-border consolidation and France's Orange -- one of the region's potential powerbrokers -- recently said it had no interest in doing so.
"There is a view in some places that the absence of in-market consolidation would accelerate pan-European consolidation," said Ramon Fernandez, Orange's chief financial officer, during a meeting with reporters earlier this month. "Our strategy is not to go for pan-European consolidation but to be stronger where we are operating."
European regulatory authorities have now shot down several attempts at in-market consolidation, while Orange's own efforts to acquire rival Bouygues Telecom last year ultimately came to nothing. (See End of the Bouygues Affair for Orange.)
Orange plans to invest more in capital expenditure this year than in 2016, and reckons capex will peak in 2018 or 2019 amid preparations for 5G. (See Orange Sees 'Peak' Capex in 2018/19, Ups 2017 Guidance.)
But Fernandez says it is questionable if 5G investments will be "sufficient to meet the objectives that have been set" at a European level.
Currently, there is considerable uncertainty over whether spending on 5G will trigger the "cyclical boost" that vendors have previously come to expect from network upgrades. (See The Growing Pains of 5G and Don't Count on 5G for a Capex Boost.)
"It does allow for the possibility of change," says Moiin. "What we hope to achieve is to reuse physical infrastructure and that outlay should be small compared with what we did in LTE."
Besides taking advantage of software upgrades to prepare networks for 5G services, Moiin also says that many operators will at first deploy the technology in hotspots requiring a capacity boost instead of pursuing a costlier wide-area rollout.
— Iain Morris, , News Editor, Light Reading