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Europe’s telcos call for connectivity investment

March 26, 2021

By Colin Mann

Europe can create 2.4 million new jobs within the next four years through digital transformation, while boosting economic growth and accelerating green transformation, according to the findings of a report, Connectivity and Beyond: How Telcos Can Accelerate a Digital Future For All, from European telecoms association ETNO and prepared by global management consulting firm BCG. This will require a €300 billion effort in terms of telecoms network investment, with additional action required to stimulate demand and digital upskilling.

The release comes as EU Heads of State and Government gather for the European Council to discuss, among others, the future of Europe’s industrial and digital policy.

Europe’s digital opportunity: New jobs, a GDP boost and green transformation

BCG analysis finds that 5G alone can generate an annual increase of €113 billion in GDP and 2.4 million new jobs in Europe by 2025. As the EU strives to reignite the economy with the Recovery Plan, building gigabit networks and innovative digital services can help increasing productivity and generating a smarter way of working.

BCG finds that a widespread uptake of digital solutions can also reduce carbon emissions by up to 15 per cent. Key enablers include 30 per cent emission cuts thanks to smart cities and 30 per cent emission cuts through digital transformation in the transports sector.

A need for more investment: €300 billion still missing for networks, €40 billion/year for schools and SMEs

In order to achieve the opportunity, Europe must dramatically ramp up its network investment capacity to achieve gigabit speeds across territories and ensure full digital inclusion. BCG estimates €150 billion is still needed to achieve a full-5G scenario in Europe, while an additional €150 billion is required to finish upgrading fixed infrastructure to gigabit speeds.

However, increased investment is also much needed on the demand side, with 83 per cent of EU SMEs still not using advanced cloud and 60 per cent of nine-year-olds currently educated in schools that are not digitally equipped. BCG estimates that upgrading the digital infrastructure of all European schools would require €14 billion/year, which corresponds to 1.8 per cent of the Next Generation EU fund. Similarly, digitalising all European SMEs would require €26 billion/year, or 3.5 per cent of the Next Generation EU fund.

Telecom solutions: collaboration for intelligent networks, cloud and innovative services

BCG analysis finds that the European telecoms sector is accelerating its transformation in seven main areas: network leadership, new collaboration models, next B2B generation, data-driven customer approach, up-stack innovations, radical simplification, and new ways of working.

This is leading to cutting-edge innovation in fields such as cloud, edge-cloud, data-based services, e-ID as well as OpenRAN – to name just a few. Collaboration within the industry and across European industrial sectors emerges as the defining feature of this new phase. Europeans citizens and businesses can expect fresh opportunities for socio-economic growth empowered by digital services designed around European values.

European policies: executing on an ambitious industrial vision

The EU’s overarching digital strategies set the right ambition for digital leadership at the global level. However, the spirit of Europe’s political goals must now permeate policy and regulatory action at both the European and national level. The report details a series of urgent policy actions, including: strongly increasing the attractiveness of investment in roll-out; allowing for more industry collaboration and scale in the sector; strongly stimulating demand and digital transformation across industrial sectors; prioritizing leadership in European digital services; and ambitious investment in digital skills.

“This Report shows that Europe’s gigabit opportunity is extremely relevant to today’s top challenges, including recovery and the green transition,” asserted Lise Fuhr, ETNO Director General. “We call on European leaders to support the telecoms sector and help us deliver a stronger digital economy for all citizens.”

“The Covid pandemic has reinforced how reliant we are on our telecoms infrastructure for virtually every aspect of our work, education and social lives,” added Wolfgang Bock, Managing Director and Senior Partner at BCG. “We need to learn and apply that lesson to ensure Europe makes the necessary investments to be able to remain competitive. Today, 83 per cent of EU SMEs do not use advanced cloud services and over 60 per cent nine-years-olds are in schools which are still not digitally equipped. Our report maps a route for Europe to build a more digitally skilled workforce and create millions of jobs.”


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