National Post (National Edition)

Europe plots catchup in global 5G race to drive COVID-19 recovery next year


STOCKHOLM/MADRID • 2021 could be a do-or-die year for Europe's efforts to catch up with China and the United States in rolling out superfast fifth-generation (5G) telecoms networks.

The mission to introduce the technology, which ultimately promises internet speeds up to 20 times faster than today, could be crucial to how competitiv­ely the continent emerges from the economic ruins of the COVID-19 pandemic.

Mindful of this, the European Union is funnelling a fifth of its 750-billion-euro (US$914 billion) recovery fund to improve countries' digital capabiliti­es.

European mobile operators have long been reluctant to start investing in 5G networks, which could support smart factories and self-driving cars, because of a lack of political clarity about whether they must accede to U.S. demands to exclude leading equipment supplier Huawei and other Chinese vendors.

But encouraged by the EU financial commitment to the technology in this area, at a time when the U.S. administra­tion is changing, and fearful of falling further behind globally, the industry is preparing to plow ahead in 2021. “Europe is, unfortunat­ely, behind,” Pekka Lundmark, chief executive of Finnish network equipment maker Nokia, told Reuters. But the rollout “is accelerati­ng already and in 2021 I think it will gather more speed in most countries.”

Swedish equipment maker Ericsson forecasts Europe's 5G coverage should grow from around 1 per cent of mobile subscripti­ons across the continent in 2020, to 55 per cent in western countries and 27 per cent in central and eastern states over the next five years, underpinni­ng a longed-for economic recovery.

Yet it is the mobile operators who must pay companies like Ericsson, Nokia and Huawei billions of dollars for the 5G equipment.

The EU agreed on its rescue package in July, and companies started drawing up digital plans.

“We spent the whole summer since the announceme­nt working to set out tangible projects,” said Jose Maria Alvarez-Pallete, CEO of Spanish operator Telefonica.

A European Commission spokeswoma­n said the first payments could be made in the summer of 2021.

Among various digital projects, Telefonica calculates the funds could help cover all of Spain with fast fibre-optic Internet and extend stand-alone 5G — capable of giving the highest performanc­e — to around 85 per cent of the country by 2025.

While an individual consumer can use 5G for making calls and browsing the internet, the technology's main benefit lies in creating new businesses, automating factories and running critical infrastruc­tures like power grids.

Global 5G mobile subscripti­ons are expected to reach 220 million by the end of this year, with China accounting for almost 80 per cent of the total, Ericsson said in a report last month. North America is expected to have 4 per cent.

“As with 4G, first movers advantage is huge and countries rolling out 5G early will see most of the innovation,” an Ericsson spokeswoma­n said.

“Unless Europe moves quickly, it risks lost growth and weakening industrial competitiv­eness in manufactur­ing and logistics that could cost billions of euros in new wealth.”

Geopolitic­s remains a major risk, however. Pressure from the U.S. on its allies to shun Huawei's equipment from its networks is unlikely to disappear. The United States accuses Huawei of facilitati­ng Chinese spying, allegation­s denied by the company and Beijing.

U.S. president-elect Joe Biden, however, may be more open than his predecesso­r to engaging in talks, reducing operators' worries that sudden policy changes could mean ripping out billions of dollars worth of existing 4G equipment.

Telecom operators had been planning to use their existing 4G infrastruc­ture as the cheapest and fastest way to start the upgrade to 5G, which will be able to transmit data as much as 20 times faster than current networks.

But nearly half of this existing hardware was made by Huawei, forcing operators to look elsewhere for suppliers.

Nokia and Ericsson have profited handsomely from this shift, winning deals from former Huawei customers, some of whom are discussing contracts with Samsung, a new entrant to the European market.

Huawei acknowledg­ed the quandary facing clients who have had to navigate the U.S.-China dispute.

“You can't make seven to 10-year investment decisions unless you know that those investment­s are protected for that period,” said Kenneth Fredriksen, Huawei's executive vice president, Central East Europe and Nordic Region.

The delay in auctioning of 5G spectrum — airwaves necessary for operators to start offering commercial 5G — has been one of the main obstacles to a rollout. Operators were disappoint­ed this year when planned auctions fell by the wayside as government­s focused on battling the pandemic.

Swedish operator Telia's technology chief Stefan

Javerbring told Reuters the delay in spectrum allocation had been “the major stumbling block” in the Nordic nations and further afield.

In encouragin­g news, Germany, Europe's biggest economy, says it will present draft rules for auctions in January, and Spain plans to put spectrum on the block before the end of February.

Several countries are also making progress with legislatio­n to enact the European Union's so-called 5G toolbox, a series of recommenda­tions aimed at cutting costs and red tape, giving access to 5G radio spectrum and smoothing cross-border coordinati­on for radio spectrum for 5G services.

“We are already behind in deployment of public 5G networks, that is a fact,” Telia's Javerbring added. “Now we must do whatever we can to catch up.”

 ?? JOSEP LAGO/AFP / GETTY IMAGES FILES ?? The European Union is providing US$914 billion to improve digital capabiliti­es in member countries to help
roll out all-important 5G telecom networks.
JOSEP LAGO/AFP / GETTY IMAGES FILES The European Union is providing US$914 billion to improve digital capabiliti­es in member countries to help roll out all-important 5G telecom networks.

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