5G and digitalisation have been at the forefront of policy discussions on many axis, from health to competition. We caught up with Ericsson’s CEO Börje Ekholm to hear about Ericsson’s work on the rollout of 5G, how they’re helping Europe to achieve its digital and green ambitions and what can be done to accelerate digitalisation and the 5G rollout.
How is Ericsson supporting the rollout of 5G?
Ericsson has proudly been at the heart of Europe’s innovation journey for almost 150 years. Our mission has always been fundamentally driven by a commitment to Europe and European values along with a desire to have Europe as a global innovation leader.
To make this happen, we invest more than €3 billion each year in R&D and employ 35,000 people across Europe. Through our 21 European Research & Development centres and 100+ unique R&D collaborations, we also engage with Europe’s industrial base and its SMEs, channelling our expertise and capital to ensure that Europe remains an innovation leader.
Ericsson was the first company to deploy 5G on four continents. This has included being part of the rollout programme in our home continent Europe. We currently have 145 commercial agreements in 63 countries helping to spread digital capacity and European values across the globe.
If we are behind our global competitors, European digital sovereignty will be compromised
Börje Ekholm, CEO and President of Ericsson
Why is Europe behind in the rollout of 5G?
In Europe we have a problem: regulation leads. This tends to be at the cost of scale and innovation. Over 100 mobile operators are active within the EU’s Single Market, causing fragmentation which limits performance and scale.
This approach was appropriate 30 years ago when national monopolies were the norm and prices were high, but this is now outdated. 20 years ago, South Korea consolidated the telecoms sector and made it a priority to compete in the area globally. More recently, the US and India have consolidated their efforts into three operators, with digital leader China having just two operators. GSMA research found 3 player markets have 23% higher speeds and 25% more usage. A fragmented Europe is being left behind.
As we enter the 5G era, the story is a familiar one. Three years after the launch of 5G, Europe is behind the US, China, South Korea, the Gulf states and Australia in building 5G. This year, India will have the best 5G network outside of China as part of the vision to create Digital India. Across all frontrunner countries, mobile markets have consolidated, establishing sustainable and competitive market structures where firms are incentivized to invest.
Why should we be concerned about Europe falling behind in the digital world?
Over the past decade, 4G created the app economy and digitalised the consumer, driving unprecedented growth. Europe however was late to deploy 4G and many of the jobs in the app economy were created by North American and Chinese platform companies. Europe today has few, large tech companies. Apps came to Europe, but jobs are created elsewhere.
5G will be even worse as it is about digitalising the whole of society. Europe consumers and businesses will get the apps, but jobs and innovation centers will be created elsewhere. Europe’s lag in digital infrastructure should be of concern to all European industrial sectors and policy makers. If we are behind our global competitors, European digital sovereignty will be compromised. This means that growth will migrate to the countries and regions that lead the connected economy. Europe must ensure it is one of these leaders.
What needs to be done to improve Europe’s rollout of 5G and digitalisation process?
A new era of cooperation and collaboration between governments, on both an EU and a member state level, and industry is required to achieve the full potential of limitless connectivity. Governments and regulators can help to propel industry forwards by advancing policies that incentivise investment in the 5G platform, enable scalable and sustainable innovation on it, and encourage the take up and use of the innovative services and solutions it makes possible.
To make this happen, the urgent execution of an ambitious public-private plan is needed to put Europe back on the path towards capturing future jobs in the digital sector. This plan must include regulatory reform, competence building and capital formation.
Our team at Ericsson supports the ambitious 2030 Digital Policy Programme but the connectivity targets are already at risk. Three years after the launch of 5G, only 7% of existing 4G base stations were upgraded to 5G on the critical midband in Europe. The US, China, South Korea, the Gulf states, and Australia are already far ahead, and India, where 5G was only launched in Q4 last year is expected to leapfrog Europe by Q4 this year. This means that priority must be given to actions that close this gap.
Why is digitalisation important for the future of Europe?
Digitalisation is critical to solving Europe’s structural problems and setting its industrial base and small and medium sized enterprises on a path towards green growth. At a time when the world is innovating at record speed, assisting our European industry is critical for competition.
Successful digital transformation could also have a profound impact on Europe’s green agenda. Ericsson’s modelling estimates that by 2030, 5G enabled digital transformation of the power, transport, industry and buildings sectors could lead to a further 170 million tons reduction of carbon dioxide equivalent, adding an additional 5% cut to the EU’s 2017 total emissions. Digital technologies could help cut emissions by 7 times more than the amount created by the ICT sector and reduce global emissions by up to 15%. But this can only be done with an acceleration of 5G connectivity.
Börje Ekholm’s three innovative ideas to close the connectivity gap
- Allow for in market mobile consolidation so operators have sufficient scale to build future infrastructure together.
- Seek to maximise investment by trading off spectrum fees and renewing long term licenses for deployment commitments while removing deployment barriers.
- The IMF has recommended bringing forward investment decisions for ‘digital and green technology’ through time-bound tax incentives. Let’s make it happen.