Ericsson and Nokia warn Europe is dying, but don't expect actionEricsson and Nokia warn Europe is dying, but don't expect action

Europe already has 'one foot in the morgue,' says Nokia's CEO, as he is joined at a Brussels event by his Ericsson counterpart.

Iain Morris, International Editor

January 17, 2025

6 Min Read
Nokia CEO Pekka Lundmark
Pekka Lundmark, Nokia's CEO, adds his voice to calls for European deregulation, but will anyone listen? (Source: Nokia)

Börje Ekholm and Pekka Lundmark aren't normally found seated together and agreeing with each other. But the respective bosses of Ericsson and Nokia, fierce rivals in 5G, managed to put aside their differences on the crucial matter of Europe's decline. Separated as they were by Henna Virkkunen, the European Commission's vice president for tech sovereignty, who sat between them like an umpire at a tennis match, the two men were in Brussels to warn of calamity for the region unless things change fast. Europe, said Lundmark, already has "one foot in the morgue."

Is this too alarmist? The headline figures clearly sound bad. The GDP gap the US has opened with the European Union has grown from 15% to 30% in the last 20 years, said Virkkunen, citing the findings of a high-profile report last year by Mario Draghi, a former prime minister of Italy, which surely knows a thing or two about unproductivity. US companies invest 60% more in research and development than their European counterparts and 50% more in capital expenditure, added Ekholm.

Technology and technological readiness are undoubtedly factors, and Europe has very evidently failed to produce the sort of Big Tech champions now commonplace in the US and even running the country. But the idea a European connectivity problem is mainly to blame, or that Europe badly trails the US on the rollout of important telecom services, looks mistaken.

On 5G, there seems little doubt that Europe does lag the US on deployment, especially in the midband spectrum range crucial for higher-speed services. According to figures cited by Virkkunen, 5G is available to only 50% of Europeans. But that seems like a gross underestimate. Ericsson puts coverage at 80%, just ten percentage points less than it is in North America. The real gap identified in its last mobility report is in midband coverage, with Europe on just 45% in November, compared with North America's 90%.

5G is not the problem

But it's hard to agree with the world's biggest 5G vendor outside China that Europe's midband lag has left it at a serious disadvantage to the US so far. The general feeling about 5G, both inside and outside the telecom industry, is one of disappointment. For all the chatter several years ago about 5G-powered robot surgery and autonomous cars, the latest mobile standard looks no different from its predecessor to most users. There is no mass-market application that works on 5G but not 4G networks.

Yes, this might change in the future with the souped-up "standalone" variant of 5G and successor technologies. But the best example the UK's BT could produce this week involved using network slicing, a standalone feature, to speed up payments at a Christmas beer tent in Belfast. In the absence of much else, Europe looks no worse off for not having spent heavily on midband 5G.

Much more important are the fiber connections to factories, offices and homes, where people consume most of their Internet content. And here, there is no evidence that Europe is behind the US. In fact, in April last year, the FTTH Council Europe, a lobby group, put full-fiber coverage across the EU39 (the 27 EU member states plus other countries in the region) at 70%. This figure was even published on a European Commission web page, which makes it odd that Virkkunen cited the lower rate of 60% in Brussels this week (where she is plucking these numbers from is unclear). But 70% would be a full ten percentage points higher than full-fiber coverage in the US, according to an update from the Fiber Broadband Association this month.

Europe's broadband markets also look more competitive than parts of the US that are served by only one or two networks. Ericsson's grumble – and Nokia, while quieter on the subject, probably agrees – is that Europe has too many operators in 5G. While nobody wants a monopoly or duopoly, building multiple 5G networks that all do the same thing looks wasteful and appears to have hammered returns on investment, especially when there are dozens of mobile virtual network operators providing services on top of that infrastructure. The European Commission's tendency, though, has been to oppose consolidation that would leave a country with fewer than four mobile networks.

Rome burns

This would be an easy fix compared with trying to push through any "cross-border" changes or set up new single-market institutions. Yet successive EU administrations have not budged, despite all the talk about adopting more investor-friendly rules. Proof came as recently as last year, when the European Commission allowed Orange and MásMóvil to merge in Spain while shoehorning another telco, Digi, into its mobile infrastructure market.

What Ekholm wants sounds far more complex. "The Trump administration has a very clear agenda of deregulation in the US, so the gap is even likely to widen on that," he said in Brussels. "We need to be much more aggressive on deregulation. We need to form a single market including a capital markets union. We need to reform competition policies till we start to consolidate around winners. I think this is fixable, but we are in a hurry to do it because the rest of world is not standing still."

The irony is a belief that the agent of deregulation could feasibly be an even bigger EU, already a famous generator of red tape. Yet the rise of nationalism across the region implies there would be little appetite for a more federal European structure and ceding of individual countries' autonomy. In telecom, the ideal for Ekholm and Lundmark is probably a single European market of three giant networks and harmonized rules on spectrum, wholesale obligations and other issues. But this would never arise naturally, instead requiring significant top-down intervention.

Bashing regulators is a favorite activity of business leaders, of course, and Europe is regularly lambasted for being risk-averse and overly timid in the market for new technologies. It is the nervous pensioner, hesitant about anything unfamiliar, next to the young technophile of the US. Lundmark put it well. "Europe has a tendency to first ask if there is technology x then what is the risk, how can we avoid that risk, do we need to regulate in case there would be something bad," he said. "The US has a very different approach. They regulate when they see that there is a risk being realized."

Yet as reasonable as those complaints may seem, artificial intelligence poses dangers earlier technologies did not. Laissez faire is all very well until something goes badly wrong. Even the world's brightest sparks sound as if they do not fully understand what they have "unleashed" – a word bizarrely chosen by the UK government this week to describe its AI policy – and whether it could lead to what people are now calling artificial general or even artificial super intelligence. How, though, could something that exceeds the combined human intelligence of the planet possibly be regulated by humans?

Whether rules should be loosened or tightened, it's almost certain nothing will change in response to the input from Ekholm and Lundmark this week. Nothing changed when the CEOs of Europe's big telcos raised similar concerns about a year ago, or when the same warnings were sounded years before. For a long time, Europe has excelled at debating problems rather than fixing them. It is the Roman senate in session while barbarians rampage outside. The likeliest next step is yet another forum.

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About the Author

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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